ISLAMABAD – Just days before presenting the federal budget, Prime Minister Shehbaz Sharif has directed all ministries to pinpoint inactive or redundant government entities that could be shut down in a bid to cut costs. The prime minister also called for urgent resolution of the longstanding power sector subsidy issue.
Sources within the government revealed to The Express Tribune that the premier was briefed on the upcoming budget, after which he formed nearly six committees to address unresolved matters. These committees were constituted with only ten days remaining before the budget’s presentation in the National Assembly.
Finance Minister Muhammad Aurangzeb is scheduled to unveil the budget on June 2, and the PM has instructed that all unresolved issues must be finalized by Saturday.
The sources noted that talks with the International Monetary Fund (IMF) are expected to conclude today. The most crucial meeting involves the IMF, the Federal Board of Revenue (FBR), and the finance ministry. Friction has reportedly emerged during these discussions, with the IMF expressing doubts over FBR’s credibility, particularly regarding commitments made in March.
Following the budget briefing, the PM mandated the committees to resolve all issues by May 24, so that the budgeting process could be completed on time. Ministries were instructed to review the “pink book” to identify outdated or ineffective organizations and recommend which ones should be dissolved to reduce government size and expenses.
Although a cabinet committee had previously launched a five-phase exercise to downsize the government, the outcomes reportedly fell short of expectations. Now, the federal rightsizing committee aims to assess the function and purpose of various state-owned enterprises by the end of December 2025.
During a recent Senate finance committee briefing, the Cabinet Division claimed that eliminating redundant positions could save Rs36 billion annually. Around 40,000 jobs have already been scrapped or marked for phase-out, with 29% of these belonging to grade-1 positions such as peons, gardeners, and sweepers, who earn an average monthly salary of Rs42,888. Nearly Rs7 billion of the projected savings stem from these lowest pay scale posts.
The PM has also instructed the finance minister to finalize the major components of the budget speech narrative. Media departments have been tasked with shaping a favorable public message around the upcoming budget.
In another key directive, the prime minister has asked the Planning and Finance ministers to hold detailed discussions with relevant ministries to review proposals and initiatives for fiscal year 2025–26. These must be carefully selected to ensure inclusion in the Public Sector Development Programme (PSDP) based on available funds.
Deputy Prime Minister Ishaq Dar is scheduled to chair a meeting today to finalize the PSDP for the next fiscal year. However, its total size remains uncertain, with the proposed Rs921 billion being considered inadequate by both the Planning Ministry and coalition partners.
The PM emphasized that all approved proposals, along with summaries of major initiatives from key ministries, should be submitted for his review. One unresolved matter remains: how much discretionary spending should be allocated under the parliamentarians’ programme. Though Rs50 billion was originally set aside, actual spending may exceed this figure, unlike the budget cuts seen in other ministries.
For the next fiscal year, the government faces pressure to increase funds under the Sustainable Development Goals (SDGs) Achievement Programme. Ishaq Dar chaired the 45th meeting of the SDGs Steering Committee on Thursday, stressing the importance of engaging local communities in identifying essential development projects. He reaffirmed the government’s commitment to using funds responsibly to benefit the public.
It was decided that unallocated SDG funds would be surrendered, and implementing agencies were instructed to efficiently utilize the resources already available. However, only around Rs2 billion remains unspent, according to insiders.
The PM has also directed both the Finance and Power ministries to resolve the power subsidy allocation issue. A meeting between the two ministries took place on Thursday, but the matter remains unsettled.
Currently, the government has allocated Rs1.04 trillion for power subsidies in the upcoming budget — around 0.8% of GDP. However, the Power Division is demanding an additional Rs180 billion, citing a share from the petroleum levy. Previously, Shehbaz Sharif had raised the petroleum levy by Rs10 per liter, resulting in a Rs1.71 per unit reduction in electricity prices.
The PM has asked the Power and Finance divisions to refine the proposal regarding the Petroleum Development Levy (PDL) to ensure targeted tariff relief. Additionally, the Petroleum Division has been directed to lead talks to resolve the input tax adjustment issue for refineries, with cooperation from the Finance and Revenue divisions. A resolution is expected by Saturday
