Govt Informs IMF About Plans to Lay Off Surplus Employees

Pakistan has disclosed to the International Monetary Fund its intention to offer golden handshake packages to surplus employees, as revenue shortfalls emerge as a critical concern in the final stages of ongoing negotiations. The global lender has challenged the logic behind maintaining federal ministries in areas constitutionally designated as provincial domains, reported Express Tribune. This week’s discussions centered primarily on Federal Board of Revenue collection prospects, government size reduction, and the future of the Sovereign Wealth Fund, which requires alignment with IMF guidelines. In briefings about government downsizing efforts, the Cabinet Division informed the IMF about plans to amend the Civil Servants Act 1973, which currently protects employees from retrenchment. This legal change would enable the government to dismiss surplus staff and officers, ending the practice of retaining underperforming employees until retirement age. The approach could potentially align civilian bureaucracy structure with military practices where only top performers advance. The briefing revealed that total savings from eliminating vacant positions and consolidating or closing approximately 10 small departments would amount to just Rs. 17 billion – a figure that pales in comparison to the government’s ambitious rightsizing claims. This initiative was further undermined last week when new units were created and ministries divided to accommodate an expanded roster of ministers, ministers of state, advisers, and special assistants to the Prime Minister. MF officials questioned Pakistan’s rationale for maintaining federal ministries in areas constitutionally designated as provincial responsibilities, such as the Federal Ministry of Education and Ministry for National Health. Prime Minister Shehbaz Sharif recently expanded his cabinet to over 50 members. Notable examples of duplication include the Interior Ministry, where Mohsin Naqvi serves as Federal Minister, Pervaiz Khattak as advisor with federal minister status, and Senator Talal Chaudhry as Minister of State. Similar redundancies exist in health and other sectors. The government outlined plans to eliminate thousands of vacant positions from grades 1 to 22, projecting savings exceeding Rs. 12 billion. This includes nearly 700 positions in grades 17 to 22 (saving approximately Rs. 2.5 billion) and thousands of lower-grade positions (saving Rs. 10 billion). The IMF suggested that the federal government consider transferring surplus employees to provincial authorities and highlighted concerns about overstaffing in the Public Sector Development Programme. The report stated that disappointing tax revenues became a major sticking point as talks progressed, with the IMF rejecting FBR projections for addressing the remainder of this fiscal year’s revenue gap. In response, the finance ministry scrambled to identify potential expenditure cuts to satisfy the lender’s concerns. Following a particularly difficult meeting Tuesday, both the FBR and finance ministry began recalculating figures, including identifying potential savings to offset revenue shortfalls. Options under consideration include surrendering the ministry’s contingency fund, reducing non-productive expenses, and reassessing primary budget surplus accounting methods. Finance Minister Muhammad Aurangzeb met with the IMF mission chief Wednesday, with discussions focusing on establishing a revised tax target for the current fiscal year. Officials expressed optimism that minor disagreements regarding revenue projections and potential savings would be resolved by Thursday. According to the report, merging, transferring, or closing about 10 organizations would save an additional Rs. 5 billion. Organizations already closed include the Jammu & Kashmir Refugees Rehabilitation Organization, while the Chief Commissioner Afghan Refugees organization is undergoing restructuring as Pakistan works to repatriate Afghan refugees by March 31st for those holding Afghan Citizen Cards. Three entities with overlapping functions – Special Economic Zones, Special Technology Zones Authority, and Export Processing Zones – will merge into the National Industrial Development Regulatory Authority. The Human Organs Transplant Authority has been incorporated into the Islamabad Healthcare Regulatory Authority, while the National Trust for Population Welfare has been shuttered and Sheikh Zayed PostGraduate Hospital transferred to Punjab’s provincial government. Additional plans include shifting the Pakistan Institute of Medical Sciences hospital to Islamabad Capital Territory administration and closing both the National Fertilizer Corporation and National Productivity Organization. While the Ministries of States and Frontier Regions have been merged with the Ministry of Kashmir Affairs and Gilgit-Baltistan, and the Aviation Division transferred to the Defense Ministry, the government has simultaneously created a new Public Affairs Unit with Rana Mubashir Iqbal as federal minister and Abdul Rehman Kanju as Minister of State.