PESHAWAR: Minister for Finance and Revenue, Muhammad Aurangzeb, announced on Wednesday that the government is planning to shut down additional departments as part of an International Monetary Fund (IMF)-backed “rightsizing” initiative aimed at cutting state expenditures.
“Efforts are underway to reduce government spending… we are closing more departments and affiliated offices,” the finance minister stated while addressing the business community in Peshawar.
To streamline operations and enhance efficiency, the federal government has devised a rightsizing program that involves the dissolution of various ministries and their attached departments.
Back in January, Aurangzeb pledged to downsize 42 ministries and their 400 affiliated departments by June 30 of the current fiscal year, with the rightsizing committee planning to cut 80 institutions by half.
“Of the 150,000 unoccupied permanent positions that were not included in the payroll, 60% have been abolished or marked as redundant, creating a significant financial impact,” he stated.
Recently, the federal government disbanded the Ministry of Aviation, merging it into the Ministry of Defence. This restructuring is expected to save Rs145 million annually.
Speaking at the Peshawar Chamber of Commerce, Aurangzeb emphasized that it is the government’s responsibility to formulate policies and ensure their continuity.
“Our economy is stabilizing,” he said, highlighting that the government’s economic strategies are yielding positive results.
Additionally, he noted that the government is consulting the business community for input on the upcoming budget and remains committed to supporting all sectors across all provinces.
Regarding tax collection, Aurangzeb revealed that steps are being taken to minimize human intervention in the Federal Board of Revenue (FBR) through modern technologies, including artificial intelligence. “Reducing human involvement will decrease revenue leakage, which is another way of addressing corruption,” he added.
“A key structural reform we have implemented is the transfer of tax policy from the FBR to the Ministry of Finance,” he stated.
In February, as part of the IMF’s requirements, the government separated the tax policy from the tax-collecting body and established the Tax Policy Office (TPO), which will function under the finance ministry.
This structural shift involves relocating the FBR’s policy division to the Ministry of Finance, a process that is expected to be fully operational by the 2025-26 fiscal year.
As per an official notification, the Tax Policy Office will be responsible for analyzing tax policies and proposals through data modeling, revenue and economic forecasting, and overseeing international tax treaties and obligations.
The Tax Policy Office will report directly to the Minister for Finance, and its staffing, as approved by the federal cabinet, will be carried out with the approval of the Establishment Division and Finance Division.
Finance Minister’s Meeting with KP Finance Adviser
Separately, Aurangzeb met with Khyber Pakhtunkhwa Chief Minister’s Adviser on Finance, Muzzammil Aslam, in Peshawar. The meeting was attended by Minister of State for Finance Ali Pervez Malik, KP Excise Minister Khaleeq ur Rahman, and KP Chief Secretary Shahab Ali Shah.
During the meeting, Aurangzeb congratulated the KP government on implementing the National Fiscal Pact and Agricultural Income Tax.
He assured the provincial government that their concerns regarding the National Finance Commission (NFC) Award would be reviewed, emphasizing the government’s intent to collaborate with all provinces.
Meanwhile, Muzzammil Aslam alleged that the federal government has halted funds for merged districts under the Accelerated Implementation Programme (AIP) and the Annual Development Programme (ADP). “Merged districts were allocated Rs66 billion in the current budget, while expenditures have reached Rs104 billion,” he added.
He urged the federal government to make interim arrangements through the NFC award to cover the additional expenses of merged districts. Furthermore, he requested that provinces be taken into confidence regarding tax enforcement, salaries, and pension matters before finalizing the next budget.
