IMF directs Pakistan to close 1,000 Utility Stores, cut workforce by June 30

The International Monetary Fund (IMF) has directed Pakistan to implement significant staff reductions at the Utility Stores Corporation (USC) by June 30 as part of a right-sizing strategy, ARY News reported, citing sources.  

The private television channel reported that 2,237 daily-wage workers have already been laid off in the first phase, and in the second phase, approximately 2,800 contract employees from grades 1 to 13 will be dismissed. Employees in higher grades (14 and above) are to be transferred to a surplus pool by the same deadline.

In addition to workforce cuts, the government has decided to shut down 1,000 financially struggling Utility Stores by the end of the current fiscal year, reducing the total number of operational stores from 5,500 to 1,500. The closure will also result in the termination of daily-wage workers employed at these stores. 

The remaining stores are expected to be privatised, according to official documents.

Utility Stores Corporation, which received a Rs38 billion subsidy in the previous fiscal year, has not yet disbursed the Rs60 billion allocated for the current year, sources confirmed.

The IMF’s request aligns with its broader fiscal reform agenda, and the measures come ahead of an important IMF Executive Board meeting scheduled for May 9. 

The meeting is expected to approve a $1.1 billion disbursement for Pakistan under its ongoing Extended Fund Facility (EFF). This meeting will also discuss modifications to performance criteria and a new arrangement under the Resilience and Sustainability Facility (RSF).

In addition, Pakistan is expected to secure $1.3 billion in climate financing from the IMF, as confirmed by IMF Director of Communications Julie Kozack during a press conference. 

This follows a staff-level agreement reached between Pakistan and the IMF last month for the first review under Pakistan’s 37-month $7 billion EFF and a new 28-month $1.3 billion RSF arrangement.