Moaaz Manzoor

The government’s efforts to downsize ministries and reduce posts aim to address fiscal imbalances but require careful execution, employment adjustments, and long-term strategies like privatization to ensure sustainable outcomes, reports WealthPK.

Speaking to WealthPK, Dr. Nasir Iqbal, Head of Macro Policy Lab at the Pakistan Institute of Development Economics (PIDE), emphasized that inefficiency and overemployment in government institutions was a “very deep-rooted issue” that would be challenging to resolve  in the near future. He suggested that the government focus on curbing the additional losses by banning new employment, which he deemed the most immediate and effective measure.

Dr. Nasir further recommended devising a diversion plan for the existing employees to ease the ministries’ burden. He remarked, “Adjustments in other ministries can reduce the employment burden and mitigate losses to some extent. This can be done easily.” He also pointed out that while privatization was the ultimate solution, it was unlikely to happen soon.

“The real solution is to go for privatization and make a win-win situation, but that doesn’t seem possible in the near future,” he noted. He concluded that short-term measures like banning new employment in the state-owned enterprises (SOEs) and implementing minor reforms could offer some relief. Economist Shahid Mehmood highlighted the significance of pension reforms, which he described as long overdue.

He remarked that successive governments deferred reforms for years despite mounting fiscal pressures. Pension reforms have been much-needed for at least a decade, but successive governments kept delaying them for one reason or another, he explained. Shahid noted that the ballooning fiscal bill, which had become unsustainable, finally forced the policymakers to act.

However, he added that the reforms would primarily affect the recent entrants to the civil service and may not yield immediate results. At the same time, Shahid expressed concerns over the government’s lack of a comprehensive strategy to safeguard the employees’ interests during this transitional phase. He stressed the importance of prudent investments in an uncertain and risky environment to protect the workforce.

“It will also be imperative to safeguard the employees’ interests through prudent investments. For that, the government does not seem to have any plan,” he said. The restructuring efforts aim to address long-standing inefficiencies and financial burdens, but both experts agree that more comprehensive reforms and strategic planning are necessary.

While short-term measures like banning new employment and redirecting the existing staff may provide some relief, absence of a clear, long-term vision could undermine the initiative’s overall impact. The government’s restructuring efforts reflect an urgent need to address fiscal imbalances, but their success hinges on effective execution and safeguarding employees’ interests. While immediate adjustments offer short-term relief, sustainable solutions like privatization and strategic investments are essential to achieving long-term fiscal stability.

Credit: INP-WealthPk