Raise in retirement age on the cards as govt on toes to secure new IMF bailout package

As part of its efforts to secure a new International Monetary Fund (IMF) bailout package, the federal government was considering raising the upper age limit for retirement across the board to reduce pension payments ahead of the global lender mission’s visit to the country.

Finance Minister Muhammad Aurangzeb made the remarks while addressing a joint press conference flanked by Law Minister Azam Nazeer Tarar and Minister for Information and Broadcasting Attaullah Tarar in Islamabad.

Aurangzeb said: “Service structure will be changed over a period of time to reduce its [pension liability] burden.”

The IMF team is expected to visit Pakistan this month during which the contours of a larger and longer programme will be discussed, the finance czar added.

He further said that their focus is to ensure macroeconomic stability and structural reforms.

Last month, cash-strapped Pakistan made a formal request to the IMF for seeking the next bailout package in the range of $6 to $8 billion under Extended Fund Facility (EFF) with the possibility of augmentation through climate financing, The News earlier reported. The government made the request as the country completed a short-term $3 billion programme in April.

Speaking on the occasion, Aurangzeb said that the confidence of investors is increasing in Pakistan as a result of its march towards stability.

He said: “The visit of the Saudi delegation remained very successful. The Saudi delegation evinced confidence in Pakistan's economy.”

The country is heading in the right direction, the minister said adding that agriculture is witnessing growth of 5% on the back of bumper crops.

He said the foreign exchange reserves have exceeded $9 billion while inflation has reduced from 38% to 17% and it is gradually coming down.

The finance minister emphasised the need to enhance the tax-to-GDP ratio to 13 to 14%. He said reforms in the energy sector will be carried out and losses of state-owned enterprises will be reduced. The minister also stressed the need for reducing expenditures.

'Parliament to be taken on board over reforms'

For his part, the law minister clarified that pension reforms will be across the board and will be carried out by taking the parliament on board.

He said a committee headed by the finance minister is working on these reforms. The minister further said that the pension reforms would also require legislation.

Addressing the joint presser, Information Minister Attaullah Tarar said recommendations have been sought to reduce the burden of pension.

“Reforms in pension structure are being mulled in the government institutions across the board,” he remarked.

Pensions were a big hurdle in the government plan of curtailing expenditure, Tarar added.

Life expectancy, he said, has increased in the world and various countries have increased the retirement age. The minister further said there was a proposal to increase the age of retirement across the board.

“A section of the media was speculating that it was aimed at some specific institution which was incorrect, if approved it would be implemented across the board.”

He said so far proposals regarding increasing the upper age limit for retirement and discussions were being held.

The minister said after coming into power, steps were taken by the government to reduce its expenses and privatisation of loss-making public sector entities was part of that plan.

— Additional input from Radio Pakistan/APP