Overview: Structural Reforms Intensify Amid IMF Deal Commitments
Islamabad — In a significant development aligned with the conditions of the International Monetary Fund (IMF), the federal government of Pakistan has intensified the rightsizing process across various ministries and departments. As part of the broader fiscal reforms aimed at reducing public sector expenditure and increasing operational efficiency, approximately 40,000 vacant posts in federal departments have been permanently abolished.
The move, which comes under the IMF’s reform agenda for Pakistan’s economic stability, also includes the merger of ministries, privatization of public enterprises, and a complete ban on temporary and ad hoc appointments in government institutions.
Background: Why the IMF Mandated Rightsizing
The rightsizing initiative is part of Pakistan’s commitment under the IMF’s Extended Fund Facility (EFF) and Stand-By Arrangement (SBA). Over the years, Pakistan has struggled with ballooning fiscal deficits, unproductive expenditures, and a bloated public sector. With debt servicing consuming a large portion of the federal budget and the government payroll exceeding sustainable levels, the IMF has insisted on reducing inefficiencies and downsizing the government machinery.
The IMF, in its recommendations, had urged the government to:
- Eliminate ghost positions and non-essential job roles.
- Cut down on the size of the public sector workforce.
- Improve governance and efficiency in public sector entities.
- Reduce subsidies and non-developmental expenditures.
The rightsizing process is therefore not only about trimming the workforce but is part of a larger structural reform aimed at restoring economic discipline and ensuring the optimal use of public resources.
Rightsizing Implementation: Key Measures Taken
Abolishment of Vacant Positions
According to official sources, around 40,000 unfilled posts in federal departments have been eliminated. These included positions that had been vacant for years and were deemed unnecessary for current or future operational needs. The finance ministry emphasized that retaining these positions was causing undue financial strain in the form of allocated salaries and administrative overheads, despite the absence of personnel.
Merger of Ministries and Divisions
The federal government has merged six divisions into three as part of the streamlining effort. This includes consolidating overlapping departments that deal with similar subjects, thereby improving efficiency and reducing bureaucratic redundancy.
Restructuring of Ministries
So far, rightsizing plans have been finalized in 10 ministries, and proposals are under review in 8 additional ministries. The reforms include reassigning responsibilities, redefining job roles, and eliminating redundant positions. This process is also designed to introduce modern management practices and technology-driven workflows to minimize human resource needs.
Ban on Temporary and Ad Hoc Hiring
In line with its goal to control public spending, the government has imposed a blanket ban on temporary, contractual, and ad hoc appointments across federal ministries and departments. In many cases, such appointments had become a way to bypass merit-based recruitment and had contributed to inefficiencies in service delivery.
The Ministry of Finance has directed all departments to halt such recruitment, citing that the reliance on non-permanent staff was neither economically sustainable nor operationally effective. Exceptions may be made only under exceptional circumstances and with explicit approval from the Prime Minister’s Office.
Privatization of Government-Owned Entities
In another major step, 45 state-owned enterprises (SOEs) and government-controlled companies have been included in the privatization program. These entities have either been underperforming or have accumulated heavy losses, contributing to the public sector’s financial burden. Among the sectors under review for privatization are:
- Power distribution companies (DISCOs)
- Oil and gas utilities
- State-run financial institutions
- Manufacturing units
- Transport and logistics firms
The Privatization Commission has already started the evaluation and due diligence process for several of these companies, and transactions are expected to proceed in phases.
Devolution and Transfer of Institutions to Provinces
In line with the 18th Constitutional Amendment, which called for the devolution of various functions to the provinces, the federal government is also working on transferring certain institutions to provincial administrations. This move not only reduces the burden on the federal exchequer but also encourages localized governance and service delivery.
Institutions related to education, health, and certain regulatory functions are being assessed for possible handover to the provinces. Coordination is ongoing with provincial governments to ensure that the transition is smooth and that operational integrity is maintained.
Institutional Modernization as a Parallel Agenda
While rightsizing focuses on eliminating inefficiencies, the government is also keen on modernizing institutions to enhance service delivery and ensure value-for-money operations. The modernization plan includes:
- Digitizing government records and administrative processes.
- Automating routine services to reduce the need for clerical staff.
- Introducing e-governance frameworks for transparency and accountability.
- Strengthening monitoring and evaluation systems.
The aim is to transform public institutions into lean, efficient, and technology-enabled bodies capable of meeting citizens’ expectations in a cost-effective manner.
Reactions and Concerns
Support from Financial Experts
Many economic analysts and financial experts have welcomed the move, terming it long overdue. They argue that the public sector had grown disproportionately large and unproductive over the years, draining national resources without commensurate output.
Dr. Kaiser Bengali, a renowned economist, remarked:
“Rightsizing the government is essential to bring fiscal sustainability. The IMF’s push may be unpopular in the short term, but it’s the bitter pill Pakistan must swallow to revive its economy.”
Concerns from Employee Unions
On the other hand, government employee unions have expressed concern over the potential job insecurity the reforms may bring. Even though the abolished posts were vacant, the broader implications of rightsizing raise fears about future layoffs and reduced hiring opportunities.
Several unions have called on the government to ensure that no serving employees are laid off unjustly and that all reforms are done transparently.
Political Implications
The government’s aggressive implementation of the IMF’s instructions comes at a politically sensitive time, as inflation and unemployment remain high, and the public is increasingly dissatisfied with economic conditions. While these reforms may yield benefits in the long run, the ruling coalition faces the political risk of public backlash if the short-term impact is not managed carefully.
The opposition has also criticized the government for succumbing too easily to IMF diktats, with some leaders calling for parliamentary oversight of the rightsizing and privatization plans.
Conclusion: A Necessary Step Towards Fiscal Responsibility
The accelerated rightsizing drive by the federal government of Pakistan, under IMF guidance, marks a bold attempt at reforming a cumbersome and inefficient public sector. By eliminating redundant positions, merging overlapping ministries, and transferring institutions to the provinces, the government aims to streamline governance, curb wasteful spending, and modernize service delivery.
However, the success of this initiative will depend on its transparent implementation, supportive legislation, and the government’s ability to manage public perception during a difficult economic transition. If executed effectively, rightsizing could become a cornerstone reform that sets Pakistan on the path to sustainable economic recovery.
