ISLAMABAD: Pakistan is undertaking a significant restructuring of its state-run Utility Stores Corporation (USC) under advisement from the International Monetary Fund (IMF), just weeks before the Fund’s executive board is set to decide on a crucial $1.1 billion disbursement. The reforms include substantial workforce reductions and the closure and potential privatization of numerous stores.
The IMF has reportedly urged Pakistan to “right-size” the USC workforce by June 30. This has already seen the release of approximately 2,237 daily-wage workers. Further cuts are planned, with around 2,800 contract employees in grades 1 to 13 slated for termination. Employees in higher grades (14 and above) may be moved to a surplus pool.
In addition to workforce reductions, officials have indicated that nearly 1,000 financially struggling USC stores will be closed by the end of the fiscal year. Many of the remaining stores are also expected to be privatized.
These measures follow a Rs38 billion subsidy provided to USC last year. While Rs60 billion was allocated for the current year, it has yet to be disbursed.
The IMF Executive Board is scheduled to meet on May 9, with Pakistan on the official agenda. The meeting will consider the first review under the Extended Arrangement under the Extended Fund Facility, a request for modification of performance criteria, and a request for an arrangement under the Resilience and Sustainability Facility. A key outcome of this meeting is the expected approval of a $1.1 billion disbursement to Pakistan under the ongoing financial program.
Separately, Pakistan has also secured $1.3 billion in climate financing from the IMF, as confirmed by IMF Director of Communications Julie Kozack.
The extensive reforms at USC are seen as a critical component of Pakistan’s efforts to meet the conditions set by the IMF for continued financial support. The planned restructuring aims to address the financial burden of the corporation and improve its efficiency, potentially paving the way for the much-needed $1.1 billion disbursement.
