RESTRUCTURING THE GOVERNMENT

The government of Pakistan has been facing budget deficit for past five decades, the main reason of budget deficit is non development expenditures of government. These expenditures are mainly for the funding to different Public Sector Enterprises (PSE), and the expenses of different ministries.

In FY 2008-2009 government faced too many losses from the state owned enterprises and exceeding expenditures of the ministries. The government suffered from shortage of funds and the revenues were not enough to meet the expenditures of the government, therefore, the government had to ask IMF for the loan to meet the expenditures of the government.

IMF has asked Pakistan government to reduce the size of ministries and it has specifically asked to reduce 13 ministries by merging various related ministries into one ministry for example Ministry of Population and Ministry of Health should be merged into one ministry to reduce the expenditures.

This restructuring has put some problems for the government, if the ministries are merged into each other, it will create unemployment in the country especially for the low level employees because jobs would be terminated when ministries would be merged. Another problem is to redefine the functions, duties and responsibilities of the ministries, different ministries even if they are related to each other, there functions and scope is quite different from one another, taking example of Ministry of Population and Ministry of Health, both have different area of scope Ministry of Population is operating at federal level whereas, Ministry of Health is operating at provincial level.

Considering the present fiscal condition of the government, it is rational to merge the ministries into one ministry to reduce the size of non development expenditures, by reducing different hierarchies the size of ministries can be reduced and it will help the government in balancing the budget. The expenditures of ministries are one of the highest amounts in the expenditures side of the budget, by reducing this amount, the budget deficit can be reduced to minimum. This will also increase the performance of ministries and they would be able to perform the functions at macro level and in every sector. Reducing the size of ministries will enable government to have sufficient amount of fund which can be allocated to the development sectors for the overall economic development of the country.

Apart from the non development expenditures on Ministries a major portion of budget goes to the funding of Public Sector Enterprises (PSE) which are facing constant loses and is now considered as burden on the economy. The Prime Minister Syed Yusuf Raza Gilani has setup ‘Cabinet Committee on Restructuring of Public Sector Enterprises’ under the chairman ship of Finance Minister Shaukat Tarin to turn loss making enterprises into profit earning entities. The government is reducing its funding and subsidies to different PSEs the budget of different PSEs has been reduced but he various Enterprises like Pakistan Railways and WAPDA has informed Finance Ministry that it would require more funds than allocated to run its operations.

The government requires these PSEs to generate their own revenues by providing quality services to the consumer and charging reasonable prices for it. To reduce the budget deficit, it is essential for the government to carry out restructuring activities. By reducing subsidies and ministries expenditures through these restructuring efforts, the government would be able to design an effective balance budget and will also be in better position to allocate more funds to the development projects.