Govt to scrap six ministries under austerity drive

Finance Minister Muhammad Aurangzeb announced on Sunday that the government has identified six departments for elimination to simplify and reduce costs as part of significant reform initiatives.

During a press conference, the minister disclosed intentions to remove 150,000 positions and implement more stringent measures against individuals who fail to file their taxes.

He promised tax collectors that they would face consequences as well.

According to him, the decision to eliminate or combine six ministries has already been made, and the implementation stage has begun. Five additional ministries were to go through the same procedure after that.

“The abolition of six ministries will proceed, including the Ministry of Capital Administration and Development Division, which will be dissolved, while two other ministries will be merged,” he stated during the news conference.

Aurangzeb reiterated the administration’s resolve to right-size and cut spending with regard to the introduction of reforms in government institutions. “Around 60% of vacant posts, approximately 150,000, will be abolished following cabinet approval,” said the minister.

Furthermore, Aurangzeb emphasised that just 14% of shops and 25% of 300,000 wholesalers are currently registered for sales tax. “We have extensive data that we will use to bring them into the tax net,” he said.

He made note of the approximate Rs1.3 trillion in tax avoidance. “Production units would sell goods only to registered wholesalers,” he explained. He issued a warning, saying that additional measures by the government might include cutting off non-filers’ access to utilities.

He promised tax collectors that they would face consequences as well. The Federal Board of Revenue (FBR) needs to be reformed, and we also need to increase its effectiveness. The FBR is not responsible for auditing,” he continued. “We are recruiting 2,000 chartered accountants.”

“Due to low inflation, the policy rate has also decreased; exports have increased by 29%; and foreign exchange reserves are at an all-time high,” he stated, emphasising the beneficial effects of the government’s measures.

He said that under Prime Minister Shehbaz Sharif’s direction, the International Monetary Fund (IMF) program had been authorised. “If we are declaring this as the last IMF programme, we must fundamentally change the DNA of our economy,” the minister stated.

He stated that there were two primary justifications for applying for the Extended Fund Facility (EFF) at the IMF: establishing macroeconomic stability permanently and carrying out important changes in line with a domestic economic agenda.

He stated that the policy rate had also decreased in tandem with the reduction in the Karachi Interbank Offered Rate (KIBOR), and that this would have a favorable effect on industry.

He claimed that Pakistan would need to register its economy and get rid of the cash economy in order to join the G-20.