Pakistan may reduce government employee salaries by 10% to combat the economic crisis

In the wake of the impending economic catastrophe in the cash-strapped nation, Pakistan is reportedly mulling various options, including reducing the pay of government employees by 10% countrywide.

In light of its declining foreign exchange reserves, Pakistan is currently experiencing one of its toughest economic crises in recent memory.

According to Geo News, the National Austerity Committee (NAC), established by Prime Minister Shehbaz Sharif, is exploring a number of options, including a 10% overall pay cut for all government workers.

According to the article, the NAC is also considering decreasing ministry/division spending by 15%, slashing the number of federal ministers, ministers of state, and advisers from 78 to 30 only, and requiring the remainder to serve pro gratis.

On Wednesday, the committee would finalize its recommendations and transmit the report to Prime Minister Shehbaz.

As it approaches another International Monetary Fund (IMF) tranche, the administration is finalizing suggestions on austerity, although it is hesitant to put the conditions into practice.

With the IMF, this hesitancy resulted in a standstill over the past 2.5 months.

Cash-strapped Pakistan restarted a stalled USD 6 billion IMF program last year that was first agreed upon in 2019, but the country is having trouble adhering to the stringent requirements of the international lender with headquarters in Washington.

According to rumors, the IMF may hold off on releasing additional funding for the program until the government fulfills its commitments.

Over USD 1.1 billion was released after the IMF board approved the seventh and eighth evaluations of Pakistan’s bailout program in August.

Islamabad is awaiting the results of a loan agreement that the previous administration negotiated with the IMF’s ninth review. The evaluation would result in the release of Pakistan’s pending next installment of funding, which has been delayed since September.

Officials from the IMF have said that they are eager to continue working with Pakistan, but that it must first fulfill a few prerequisites.