Pakistan has informed the International Monetary Fund of its plans to offer golden handshake packages to surplus government employees amid growing concerns over revenue shortfalls.
The proposal, revealed during final-stage negotiations with the IMF, would require amending the Civil Servants Act 1973, which currently protects employees from retrenchment. This legal change would allow the government to dismiss redundant staff and end the practice of retaining underperforming employees until retirement, according to a report by Express Tribune.
“The approach could potentially align civilian bureaucracy structure with military practices where only top performers advance,” a source familiar with the discussions said.
During briefings on government downsizing efforts, the Cabinet Division disclosed that eliminating vacant positions and consolidating approximately 10 small departments would save just Rs. 17 billion – significantly less than suggested by the government’s ambitious rightsizing claims.
The IMF has questioned Pakistan’s rationale for maintaining federal ministries in areas constitutionally designated as provincial responsibilities, such as education and health. This scrutiny comes as Prime Minister Shehbaz Sharif recently expanded his cabinet to over 50 members, with notable duplications in ministries like Interior, where three officials hold ministerial positions.
Government plans include eliminating thousands of vacant positions across grades 1-22, projecting savings of Rs. 12 billion. This includes nearly 700 positions in grades 17-22 (saving Rs. 2.5 billion) and thousands of lower-grade positions (saving Rs. 10 billion).
The IMF has suggested transferring surplus federal employees to provincial authorities and expressed concerns about overstaffing in the Public Sector Development Programme.
Revenue performance has emerged as a major sticking point in the talks, with the IMF rejecting Federal Board of Revenue projections for addressing this fiscal year’s revenue gap. Finance Minister Muhammad Aurangzeb met with the IMF mission chief Wednesday to discuss revised tax targets, with officials expressing optimism that disagreements would be resolved by Thursday.
The government has already begun organizational restructuring, with plans to merge three entities with overlapping functions – Special Economic Zones, Special Technology Zones Authority, and Export Processing Zones – into the National Industrial Development Regulatory Authority. Other changes include incorporating the Human Organs Transplant Authority into the Islamabad Healthcare Regulatory Authority and transferring Sheikh Zayed PostGraduate Hospital to Punjab’s provincial government.
Additional plans include shifting the Pakistan Institute of Medical Sciences hospital to Islamabad Capital Territory administration, closing the National Fertilizer Corporation and National Productivity Organization, and merging the Ministries of States and Frontier Regions with the Ministry of Kashmir Affairs and Gilgit-Baltistan.
