ISLAMABAD: The Pakistan government said on Tuesday it was vital to reform the country’s pension system, including by raising the retirement age, to mitigate expenditure as Islamabad aims to save the system billions of dollars per year, with a committee formed to propose recommendations. 

The belt tightening moves come as Islamabad — which is facing a balance of payment crisis — is in talks with the International Monetary Fund (IMF) to secure a new long-term bailout deal. In the past, Pakistan has faced the challenges of revenue generation and government expenditure and struggled with high levels of debt, a large fiscal deficit and an ongoing need for structural reforms to improve its fiscal sustainability.

Under the last $3 billion bailout, Pakistan implemented several IMF-mandated reforms, such as budget adjustments, increasing interest rates, and higher energy prices. Among expected reforms under a new program are strengthening public finances through gradual fiscal consolidation, broadening the existing tax base and improving tax administration, and debt sustainability, all while protecting the vulnerable. 

An IMF mission is expected in Pakistan in the next ten days to discuss a new loan program that the finance minister has said would be “larger and longer.” 

“Age is just a number,” Finance Minister Muhammad Aurangzeb said at a press conference in Islamabad, calling for reforms in the pension system and saying pension payments were a “huge liability.”

“Sixty is the new 40. In the [private sector] institution I left before coming here [as finance minister], we raised the retirement age from 60 to 65. These are your most productive years when you have maximum experience.”

He recognized that changes to the service structure could not be carried out overnight but said Pakistan would need to move in this direction to control the pension costs.

Law Minister Azam Nazir Tarar said pension reforms would be held across the board, for which legislation was required.

“A large chunk of yearly revenue is utilized on paying retirement benefits and pensions,” Tarar said at the press conference with Aurangzeb. “Legislation is required for this as civil servants, armed forces, judicial organs, and executive organs are included.”

The law minister said a committee had been formed under the chair of the finance minister to propose recommendations pertaining to pension reforms.

In March this year, Pakistan’s media widely reported that the finance ministry had shared a pension reform program with the IMF to contain growing pension liabilities, with the consolidated federal and provincial pension expenditure projected to increase by over 20 percent from Rs1.252 trillion last year to Rs1.513tn this year.

The reforms scheme shared with the lender reportedly seeks to cut the annual federal pension expense on existing employees by changing the formula for pension calculation, slashing the commutation rate, discouraging early retirement through the imposition of a penalty, restricting the list of beneficiaries of the deceased employees, and ending the current practice of multiple pensions.

In a 2021 report, the State Bank of Pakistan said the federal pension expenditure was increasingly becoming unsustainable:

“When we look at the federal pension bill, there has been a significant rise. Pension bill has increased at a Compounded Annual Growth Rate (CAGR) of almost 14pc during 2012-23.”

According to the bank, overall pension spending as a percentage of total budgeted expenditure for FY20 exceeded the federal and provincial health and education spending and was almost half the level of consolidated development expenditures.

The World Bank in 2020 warned that salary and pension costs in Pakistan would persistently grow and crowd out other public expenditures in the coming years.

ISLAMABAD: A senior official of the Indian cricket board this week confirmed that it would send its team next year to Pakistan for the Champions Trophy tournament only if its central government gave it permission to do so. 

Pakistan is expected to host the ICC Champions Trophy 2025 tournament from February to March 2025. The Pakistan Cricket Board (PCB) has proposed three venues for the tournament— Lahore, Karachi and Rawalpindi, according to local and international media reports. However, out of the eight participating teams, a question mark looms over whether the Indian cricket team will travel to Pakistan for the tournament. 

The last time an Indian cricket team traveled to Pakistan for a cricket event was in 2008 for the Asia Cup. The Nov. 26 2008 Mumbai attacks caused a severe strain in India-Pakistan relations, forcing both teams to play against each other only during international events and at “neutral venues.”

As hosts of the Asia Cup last year, Pakistan were forced to agree to a hybrid model according to which India played all of their matches, including those against Pakistan, in Sri Lanka. Though Pakistan raised the prospect of a hybrid model for their presence in the ODI World Cup in India last year, they ended up playing all their games in the neighboring country. 

“In the case of the Champions Trophy, we will do whatever the government of India will tell us to do,” Rajeev Shukla, vice president of the Board of Control for Cricket in India (BCCI) told Indian news agency ANI on Monday. 

“We send our team only when the government of India gives us permission.”

According to cricket website ESPNcricinfo, Pakistan has proposed hosting all of India’s Champions Trophy matches in the eastern city of Lahore. The website reported that hosting all of India’s matches in Lahore would mean less logistical and security headaches around their travel. Additionally, the Wagah border crossing in Lahore allows Indian fans a relatively easier option to visit.

Pakistan are defending champions of the ICC Champions Trophy. The green shirts won the trophy under former captain Sarfaraz Ahmed in 2017 at The Oval in London after thrashing India by 180 runs to win the tournament. Champions Trophy 2017 was thought to be the last edition of the tournament until the ICC brought it back in the new rights cycle (2023-2027) and awarded Pakistan the hosting rights for the 2025 edition.