Pakistan’s Prime Minister, Shehbaz Sharif, has announced a new austerity drive that will save the country 200 billion rupees ($766 million) per year. Ministerial allowances and travel expenses will be reduced as part of the measures taken as Islamabad seeks a $1 billion funding agreement with the International Monetary Fund (IMF). Furthermore, according to Reuters, all federal ministries and government offices would be required to cut spending by 15%.
In order to make these cuts, Sharif has asked ministers and advisors to forego their salaries, allowances, luxury cars, foreign trips, and business class travel. The ministers have agreed to the austerity measures voluntarily, which include paying their own utility bills, giving up their luxury vehicles (which will be auctioned off), and flying coach on all domestic and international trips. Ministers will no longer be able to use five-star hotels on official international trips, in addition to being limited to a single security vehicle.
According to Reuters, additional measures include a ban on the purchase of luxury goods and vehicles until June 2024. The federal government as a whole, including all agencies, bureaus, and organisations that report to it, must cut spending by 15%. Talks between Pakistan and the IMF are expected to conclude this week, and these stringent measures are among the conditions the IMF has asked Pakistan to meet before reaching an agreement.
The International Monetary Fund (IMF) has previously requested that Pakistan take a number of steps, including ending subsidies, raising energy prices, and generating additional revenue. Sharif stated that his country is working hard to meet IMF requirements for receiving funding and is hopeful that it will do so soon.
Pakistan is experiencing a balance of payments crisis and is seeking assistance from the IMF to resolve the situation. To assist Pakistan in meeting its economic objectives in the coming years, the government has implemented new austerity measures to reduce spending and strengthen the country’s financial stability.
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