Pakistan Unveils Austerity Measures: 150,000 Jobs Cut, 6 Ministries Abolished

Pakistan's government has announced a major overhaul of its administrative structure, cutting 150,000 jobs and abolishing six ministries as part of its agreement with the International Monetary Fund (IMF). The move is aimed at reducing administrative expe

PakistanImfAusterity MeasuresJob CutsMinistry AbolitionTax ReformsEconomic ReformsReal EstateSep 29, 2024

Pakistan Unveils Austerity Measures: 150,000 Jobs Cut, 6 Ministries Abolished
Real Estate:Pakistan's Finance Minister Muhammad Aurangzeb has announced a major austerity drive, aimed at reducing administrative expenditures and increasing tax revenues. The government has decided to abolish six ministries and merge two others, resulting in the elimination of 150,000 posts across various ministries. The move is part of the country's agreement with the International Monetary Fund (IMF) under a $7 billion loan deal. The IMF had approved the loan package on September 26, releasing over $1 billion as the first tranche. Pakistan has committed to cutting expenditures, increasing tax-to-GDP ratio, taxing non-traditional sectors like agriculture and real estate, limiting subsidies, and transferring some fiscal responsibilities to provinces. Aurangzeb said that the non-filers category will be abolished, and those not paying taxes will no longer be able to purchase property or vehicles. The minister claimed that the economy is moving in the right direction, with foreign exchange reserves increasing to their highest level. He also highlighted significant growth in national exports and IT exports, and stated that investor confidence in the economy is a major success. The policy rate has been reduced by 4.5% since the government came to power, and Aurangzeb expressed optimism that the exchange rate and policy rate will remain as expected. Pakistan has been struggling to fix its economy for years and was close to default in 2023, but a timely loan of $3 billion from the IMF saved the situation. The country has negotiated a long-term loan with the global lender, hoping that it will be the last loan. However, many doubt this claim, as Pakistan has already secured about two dozen loans from the Fund but failed to address the economy on a permanent basis.

Frequently Asked Questions

Why has Pakistan announced austerity measures?

Pakistan has announced austerity measures to reduce administrative expenditures and increase tax revenues, as part of its agreement with the International Monetary Fund (IMF).

How many jobs will be cut as part of the austerity measures?

150,000 jobs will be eliminated across various ministries as part of the austerity measures.

Which ministries will be abolished?

Six ministries will be abolished, although the specific ministries have not been named.

What other reforms has Pakistan committed to as part of its agreement with the IMF?

Pakistan has committed to cutting expenditures, increasing tax-to-GDP ratio, taxing non-traditional sectors like agriculture and real estate, limiting subsidies, and transferring some fiscal responsibilities to provinces.

Will the austerity measures have an impact on the economy?

The government claims that the economy is moving in the right direction, with foreign exchange reserves increasing to their highest level, and significant growth in national exports and IT exports.

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