Govt plans to lay off surplus employees
Pakistan has informed the International Monetary Fund (IMF) about its plan to lay off surplus employees by offering them golden handshake, as weak performance of revenues has emerged a major area of concern towards the fag end of the talks.
The global lender has also questioned the rationality of retaining ministries in areas that under the Constitution are provincial subjects, said the government sources privy to the discussions.
During this week, the IMF's focus remained on the Federal Board of Revenue's tax collection and prospects, the size of the government and more importantly the fate of the Sovereign Wealth Fund, which has to be brought in line with the IMF's prescription.
The sources said that weak tax revenues emerged as a major source of concern towards the end of the talks after the IMF did not accept the FBR's projections for bridging the revenue shortfall for the remainder of the fiscal year. The finance ministry also rushed to the drawing board to find out areas where expenditures can be cut to satisfy the IMF.
One of the meetings held on Tuesday did not go well and after that the FBR and the finance ministry started redoing the numbers, including finding the potential sources of savings to offset the revenue shortfall. The ministry may have to surrender its contingency fund, reduce certain non-productive expenses. It was also looking at the accounting of the primary budget surplus, said the sources.
Finance Minister Muhammad Aurangzeb also held a session with the IMF mission chief on Wednesday. The discussions focused on the new tax target for the FBR for the current fiscal year.
The authorities were hopeful that the small differences over the revenue projections and the potential savings would be sorted out today (Thursday).
Golden handshake
The sources said that the Cabinet Division gave a briefing to the IMF about the actions, which are needed to reduce the size of the government. Under the $7 billion package, the government was required to "share with the IMF staff a report detailing actions to reduce the federal government's footprint".
The IMF was told that the government was planning to amend the Civil Servants Act 1973, which provides protection against retrenchment, in order to lay off the surplus staff and the officers. The Fund was told at present no employee can be sent home because of the legal protections under the Civil Servants Act.
The plan, if implemented, would end the current practice of retaining deadwoods till their superannuation age. It may also help aligning the civilian bureaucracy structure with the military where best-of-the-best are retained.
During a briefing on the government's current drive to reduce the size of the civil machinery, it was disclosed that total savings from abolishing vacant positions and merging or winding up some 10 small departments were hardly Rs17 billion.
The amount of savings is not big compared to the government's tall claims of implementing the rightsizing drive – an initiative that was also punctured last week when new units were created and ministries were divided to accommodate the new battalion of ministers, ministers of state, advisers and special assistants to the Prime Minister.
The sources said that the IMF questioned the Pakistani authorities about the need for having ministries in the domains, which under the constitution are the provincial subjects. There are many ministries that fall in the provincial domain like the Federal Ministry of Education and the Ministry for National Health.
Prime Minister Shehbaz Sharif has appointed ministers and ministers of state, taking the size of his cabinet to over 50 during the recent expansion drive. There are three persons responsible for the Ministry of Interior or interior affairs. The Federal Minister for Interior is Mohsin Naqvi, the advisor on Interior Affairs with the status of federal minister is PTI disgruntled Pervaiz Khattak and Senator Talal Chaudhry is the Minister of State for Interior.
Likewise, there is a federal minister for health and the minister of state for health.
The government informed the IMF about its plan to abolish thousands of vacant positions from grade 1 to 22 to save over Rs12 billion. These include nearly 700 positions in the grade 17 to 22, which would save roughly Rs2.5 billion and abolishing thousands of low pay scale positions to save Rs10 billion.
The IMF opined that the federal government should also consider transferring the surplus employees to the provinces. The issue of overstaffing in the Public Sector Development Programme was also highlighted in the meeting
The government informed the IMF that it had merged, transferred or closed about 10 organizations, which will save another Rs5 billion.
Some of the organizations, which have been closed, include the Jammu & Kashmir Refugees Rehabilitation Organization. The IMF was told that Pakistan was also restructuring the Chief Commissioner Afghan Refugees organization. The government has already begun the process to repatriate the Afghan refugees and gave a March 31st deadline to those having Afghan Citizen Cards.
It has also been decided to merge three entities doing the same job and form a new authority. The Special Economic Zones, the Special Technology Zones Authority and the Export Processing Zones offices will be merged into the National Industrial Development Regulatory Authority.
The Human Organs Transplant Authority has been merged with Islamabad Healthcare Regulatory Authority. The National Trust for Population Welfare has been closed while Sheikh Zayed PostGraduate Hospital is being transferred to the Punjab government.
The government was also planning to shift the Pakistan Institute of Medical Sciences (PIMS) hospital to Islamabad Capital Territory, said the sources. The government has also decided to shut down the National Fertilizer Corporation and National Productivity Organization.
The government has merged the Ministries of States and Frontier Regions and Ministry of Kashmir Affairs and Gilgit-Baltistan.
It has handed over the Aviation Division to the Ministry of Defense but has created a new Public Affairs Unit and appointed Rana Mubashir Iqbal as federal minister and Abdul Rehman Kanju as Minister of State.
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