Pakistan Economic Reforms to stabilize Pakistan’s fragile economy include the government structure and public sector expenditure. As part of an all-around reform package agreed on with the IMF, Pakistan is set to cut 150,000 jobs in the government, shut down six ministries, and merge two others.
All these reforms fall under the USD 7 billion loan agreement made with the IMF. They are meant to help the country bring down its debt and move toward economic sustainability.
Pakistan Cuts Job in government services and Ministry mergers
One of the most important elements of the reform plan is the elimination of some 150,000 government posts across different ministries. In fact, the right-sizing agenda alone ensures that some redundant positions will be phased out to streamline operations and redundant posts within the machinery of government. Apart from the sackings, six ministries are to be closed while two others merged in a bid to cut more administrative costs and improve efficiency.
We will have to adopt three to four underdeveloped or perpetual economies, funded by the government of Qatar, Saudi Arabia, and the United Arab Emirates and an independent international fund, Pakistan’s Finance Minister Muhammad Aurangzeb said.
Reforms were in order in order to proceed further, he added, referring to the ‘necessary steps towards long-term economic stability’. “We need to implement our policies to prove that this will be the last IMF program for Pakistan,” he said, underlining that the government was committed to its success.
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Pakistan Tax Reforms and Expanding the Tax Base
A significant part of Pakistan’s economic reform agenda is an increase in its tax-to-GDP ratio by enhancing the tax base. In the last year, around 300,000 new taxpayers were registered in Pakistan.
Compared to this, figures this year have more than doubled to 732,000 new taxpayers, and thus the taxpayer population of the country stands to be 3.2 million. Taxation of non-traditional sectors like agriculture and real estate sectors also enjoys importance since these have been under-taxed sectors.
The above reforms on taxation are considered essential to allow Pakistan an opportunity to reduce its reliance on foreign borrowing and become more sustainable in terms of economic vibrancy. Registration of a more significant number of taxpayers and targeting hitherto untapped sectors shall greatly enhance revenue collections.
Glimmers of Recovery in Pakistan Economy
While the measures taken by the government are as stringent, it has still claimed that the economy is on the right track. Finance Minister Aurangzeb believes foreign exchange reserves have touched the highest levels in recent times and therefore provided stability to the economy. The government has supposedly tamed inflation, once a major problem, into single digits by effective policies.
The IMF deal and subsequent economic policies were aimed at preventing Pakistan from slipping back into debt once more. Pakistan barely avoided default in 2023 and was rescued by the timely influx of a USD 3 billion loan from the IMF. The government is therefore hoping to establish a stronger economy that can stand without further assistance through this new reform package.
Pakistan Economic Reforms A Step Towards Economic Sustainability
Committing to such reforms reflects the intent of this country: to rebuild its economy and avoid a future threat of financial instability. Undeniably, cuts in government jobs and the closure of ministries will affect many people.
However, the objective is to build a better, more efficient and more responsible government in the finance department. With support from the IMF and an expanding taxpayer base, Pakistan is now truly on the road toward sustained economic growth and stability.
Broad steps the government of Pakistan is now taking comprise cutting of 150,000 jobs in the government, closing and amalgamation of ministries and raising its tax base. The reform package of USD 7 billion agreed between IMF include these three areas of restructuring in the country’s bureaucracy.
Having elements of improved economic indicators like inflation and foreign exchange reserves, it seems that the country is heading toward long-term stability in finances.
