The federal government has begun implementing a plan to cut public spending by abolishing up to 60 percent of vacant positions across federal ministries and their attached departments.

The move follows a government notification issued as part of measures linked to Pakistan’s commitments under its agreement with the International Monetary Fund (IMF).

The plan covers vacant posts in federal ministries and their attached departments. The government is taking the step as it works to reduce its expenditure and implement agreed reforms.

The development comes ahead of Pakistan’s next review with the IMF, which is expected to take place next month.

The electricity sector’s circular debt is also expected to be a key issue during the upcoming talks. Sources said the debt has risen well above the limit agreed with the IMF, which had initially targeted keeping it at Rs. 1.6 trillion.

Higher international energy prices following the US-Iran conflict have contributed to the increase in circular debt, according to the sources.

Prime Minister Shehbaz Sharif has directed his economic team to prepare an alternative plan to deal with the circular debt issue instead of increasing electricity prices.

During the review, Pakistan is expected to brief the IMF on progress under agreed structural benchmarks and discuss circular debt targets for the electricity and gas sectors.

The two sides are also expected to discuss broader reforms in the energy sector and other economic targets under the existing IMF program.

Successful completion of the review could unlock around $1 billion for Pakistan under the existing loan program, along with another $200 million aimed at strengthening climate resilience.