Cash-strapped Pakistan dissolves 6 ministries as part of IMF deal

To minimise administrative expenditures, cash-strapped Pakistan on Sunday announced to abolition of about 1,50,000 government posts, closing six ministries, and merging two others, as part of reforms agreed upon with the IMF under a US$7 billion loan deal, PTI reports.

The International Monetary Fund on September 26 finally gave a nod to the assistance package and also released over US$1 billion as the first tranche after Pakistan committed to cutting expenditures, increasing tax-to GDP ratio, taxing non-traditional sectors like agriculture and real estate, limiting subsidies and transfer some fiscal responsibilities to provinces.

Addressing the media on his return from the US, Minister for Finance Muhammad Aurangzeb said that a programme had been finalised with the IMF, which would be the last programme for Pakistan.

"We need to implement our policies to prove that it will be the last programme," he said and emphasised that to join the G20, the economy must be formalised.

The minister said right-sizing within ministries was going on and the decision to close six ministries is set to be implemented, while two ministries will be merged. "Additionally, 1,50,000 posts across various ministries will be eliminated," Aurangzeb said.

Pakistan has been struggling to fix its economy for the last many years and it was close to default in 2023 but a timely loan of US$3 billion by the IMF saved the situation.

Pakistan has negotiated a long-term loan with the global lender with the hope and commitment that it would be the last loan. However, many doubt this claim as the country has already secured about two dozen loans from the Fund but failed to address the economy permanently.