The 60-member team of Pakistan Prime Minister Yousuf Raza Gilani resigned en-masse on Wednesday to facilitate pruning of the cabinet which should not exceed 48 members as per the country's constitution.
The constitution stipulates that that the cabinet strength should not be more than 11 percent of 442-member National Assembly and a new cabinet within the stipulations is likely to be announced on Thursday. The resignations have been sent to the president for formal approval, said a report.
However, there is another angle to the country's efforts to prune not only its cabinet but also the government expenditure which is above its capacity. In December, the International Monetary Fund, which had promised $11.3 billion loan in 2008 to meet the country's balance of payments problem over three years, held the last tranche of $3.5 billion urging Islamabad to tighten its fiscal expenditure and gave nine months until September 2011 to implement the reforms.
Though the cabinet downsizing may not sharply reduce the government expenditure, it may be another gesture that the government wanted to showcase on the financial discipline front.
But IMF was more upset with the populist measures of the government like increasing subsidies on fuel or reduction in petroleum prices. In a press briefing last month, Caroline Atkinson, one of the directors at IMF, clarified that these are domestic issues and not a part of the IMF program.
But she said, However, energy subsidies consume a large part of the budget. They’re inefficient and untargeted so that the bulk of the energy—of the benefit from the energy subsidy goes to higher-income individuals and large companies. So it will be important for Pakistan to release the money that it’s spending on energy subsidies to go towards social spending, education, health reform, dealing with the after impacts of the flood. That would be a better targeted use of spending.
It remains to be seen how far Islamabad heeds the advise and how soon.