Pakistan has eliminated 55,545 government positions as part of a comprehensive federal rightsizing initiative mandated by the International Monetary Fund under the $7 billion Extended Fund Facility agreement.
The restructuring will generate annual savings of Rs 56 billion and represents the most ambitious public sector reform in decades, targeting 20 federal ministries and their attached departments.
Finance Minister Muhammad Aurangzeb confirmed the rightsizing drive as an IMF structural benchmark that must be completed by June 30, 2025.
IMF Structural Benchmark Requirement
The IMF formalized Pakistan’s rightsizing commitment under the 37-month Extended Fund Facility approved in September 2024. The program prioritizes federal streamlining alongside provincial devolution under the National Fiscal Pact.
The rightsizing initiative addresses constitutional mandates under the 18th Amendment, which transferred numerous functions to provincial governments but left federal ministries largely intact. The IMF questioned Pakistani authorities about retaining ministries in domains that are now provincial subjects.
The restructuring forms part of broader Economic Governance Reforms comprising 142 actions, including 59 priority measures covering taxation, energy, privatization, state-owned enterprises, pensions, and regulatory simplification.
Federal Government Restructuring
Prime Minister Shehbaz Sharif constituted a high-powered rightsizing committee in June 2024 under Finance Minister Aurangzeb’s leadership. The committee reviewed 43 ministries and their 400 attached departments or entities.
The initiative targets productive and allocative efficiency by identifying functions that can be privatized, transferred to provinces, or eliminated entirely.
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Position Elimination Strategy
The federal government has abolished or placed under phased elimination 55,545 vacant posts. Around 44,286 vacant positions have been removed outright, while 11,259 posts have been declared as “dying cadre,” meaning they will be eliminated over time as incumbents retire or positions fall vacant.
Additionally, 150,000 vacant government positions have been permanently abolished across the federal structure. The government has avoided layoffs of serving employees, instead targeting unfilled positions and allowing designated posts to phase out naturally.
Employees in various departments are being offered voluntary retirement under a golden handshake program. The government plans amendments to the Civil Servants Act of 1973 to eliminate redundant positions permanently.
Ministry Consolidation
The Committee on Institutional Reforms recommended eliminating 150,000 vacant positions, banning contingency recruitment, and outsourcing non-core services such as cleaning and janitorial work.
Several organizations have been closed, including the Jammu & Kashmir Refugees Rehabilitation Organization. The Chief Commissioner Afghan Refugees organization is being restructured.
Three entities performing similar functions have been merged into the National Industrial Development Regulatory Authority: Special Economic Zones, Special Technology Zones Authority, and Export Processing Zones offices.
The Human Organs Transplant Authority merged with Islamabad Healthcare Regulatory Authority. The National Trust for Population Welfare was closed, while Sheikh Zayed PostGraduate Hospital transferred to Punjab government.
Three-Phase Implementation
The rightsizing process proceeds ministry by ministry rather than through across-the-board cuts, learning from past failures of blanket restructuring attempts.
Phase One Ministries
The first phase targeted six ministries: one ordered for closure, one for merger, and attached departments reduced from 80 to 40. Ministries included Kashmir Affairs and Gilgit-Baltistan, information technology and telecom, industries and production, national health services, and capital administration.
Implementation is currently underway, with ministries submitting compliance reports.
Phase Two Ministries
The second phase addressed ministries of science and technology, commerce, housing, and food security. A total of 25 departments were closed, 20 scaled down, and nine transferred elsewhere.
Phase Three Ministries
Phase three covered federal education, information and broadcasting, national heritage and culture, finance, and power ministries.
The cabinet approved approximately 95 percent of rightsizing committee recommendations, with only 1 percent of decisions subsequently altered after reconsideration.
Financial Savings Achieved
Rightsizing reforms underway in 20 ministries will abolish around 54,000 positions by end of 2025, generating estimated annual savings of Rs 56 billion to be reflected in upcoming budgets.
The amount represents significant progress toward reducing recurring expenditure and improving administrative efficiency. However, critics note the savings appear modest compared to the government’s tall claims, particularly after new ministerial units were created to accommodate expanded cabinets.
The reduced wage bill allows resources to redirect toward critical development spending, social protection, and human capital investment.
Voluntary Retirement Program
Surplus employees are being offered golden handshake packages as an alternative to forced layoffs. The voluntary retirement scheme provides compensation to encourage willing departures while maintaining morale among retained staff.
Officials stated that many public sector entities admitted minimal output over the past 20-30 years but requested grace periods to demonstrate improved performance. The rightsizing committee rejected such requests, emphasizing immediate action.
Provincial Coordination
The federal rightsizing committee is coordinating with provincial governments under the National Fiscal Pact framework. The pact enhances federal-provincial fiscal relations and facilitates proper devolution consistent with the 18th Constitutional Amendment.
Provinces are expected to absorb some transferred functions and employees from federal ministries whose mandates now fall under provincial jurisdiction, including education and health.
The National Finance Commission provides opportunities to strengthen federal-provincial fiscal frameworks and accountability mechanisms supporting the restructuring.
Implementation Challenges
The IMF’s focus during recent reviews remained on tax collection prospects, government size, and structural reform implementation. Weak tax revenues emerged as a major concern alongside rightsizing progress.
Some cabinet members initially resisted rightsizing recommendations, according to official statements, though the Finance Minister disputed the extent of resistance. Certain ministries requested exemptions or delays, which were largely denied.
The initiative faced criticism after Prime Minister Sharif expanded his cabinet to over 50 members during a recent reshuffle, creating new positions while simultaneously pursuing staff reductions. Three persons were assigned responsibility for Ministry of Interior affairs alone.
The IMF questioned the rationality of retaining ministries in areas constitutionally designated as provincial subjects, including Federal Ministry of Education and Ministry for National Health.
Many ministries remain overstaffed with politically inducted personnel contributing negligibly to institutional performance. The challenge lies in ensuring well-thought-out recommendations that future governments will not reverse.
Rightsizing represents one component of Pakistan’s comprehensive structural reform agenda under the EFF, which includes revenue mobilization, energy sector viability, SOE privatization, and governance improvements. Success depends on sustained political commitment and consistent implementation despite inevitable resistance from affected stakeholders.