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
