NEW DELHI: Pakistan is taking drastic measures to address its ongoing economic crisis, announcing significant job cuts and the dissolution of several government ministries as part of a new agreement with the International Monetary Fund (IMF). The country, which has been grappling with financial instability for years, is now implementing these changes to secure its future and avoid default according to a detailed Press Trust of India report.

In a recent press conference, Finance Minister Muhammad Aurangzeb revealed that the government will eliminate 150,000 positions across various ministries. Additionally, six ministries will be dissolved while two others will be merged. This right-sizing initiative aims to streamline government operations and reduce fiscal burdens as Pakistan strives to formalise its economy. Aurangzeb emphasised that these measures are crucial for the country’s ambition to join the G20.

The finance minister also highlighted improvements in tax collection, noting that the number of registered taxpayers has surged from 1.6 million to 3.2 million within a year. This increase is attributed to approximately 732,000 new taxpayers who have registered so far this year. The government plans to abolish the non-filers category, making it impossible for those not paying taxes to purchase property or vehicles.

Despite the challenges, Aurangzeb expressed optimism about Pakistan’s economic trajectory. He stated that foreign exchange reserves are at their highest levels in recent times, alongside notable growth in national exports and IT services. Investor confidence appears to be returning, which he described as a significant achievement for the government.
The finance minister also pointed out that inflation has decreased to single digits due to effective government policies. He reassured citizens that the economy is moving in the right direction, with expectations that both the exchange rate and policy rate will stabilise.

Pakistan's economic struggles have been worsened by its reliance on loans from international lenders. In 2023, the country was on the brink of default but managed to secure a USD 3 billion loan from the IMF. The current agreement is seen as a potential last resort; however, doubts remains regarding Pakistan's ability to sustain long-term economic reforms after having previously secured numerous loans without lasting improvements.

As Pakistan embarks on this challenging path towards economic recovery, the government's commitment to restructuring and reform will be closely scrutinised by both domestic and international observers. The coming months will be pivotal in determining whether these measures can indeed pave the way for a more stable financial future for the nation.