In a bid to revive its struggling economy, Pakistan's Prime Minister Shehbaz Sharif on Tuesday, May 14, announced plans to privatise all state-owned enterprises (SOEs), excluding strategic ones, in a sweeping move aimed at reducing the burden on the cash-strapped nation.
The decision comes as Pakistan starts negotiations with the International Monetary Fund (IMF) for a new long-term Extended Fund Facility (EFF).
Addressing the meeting, Sharif emphasised that the government's role is to create a conducive environment for business and investment rather than directly engaging in business activities.
Key among the enterprises slated for privatisation is the Pakistan International Airlines (PIA), a perennially loss-making entity that has been a significant drain on the country's finances.
A roadmap outlining the Privatisation Programme 2024-2029 was presented during the meeting, detailing the prioritisation of loss-making SOEs for privatisation, The Express Tribune newspaper reported.
In a bid to revive its struggling economy, Pakistan's Prime Minister Shehbaz Sharif on Tuesday, May 14, announced plans to privatise all state-owned enterprises (SOEs), excluding strategic ones, in a sweeping move aimed at reducing the burden on the cash-strapped nation.
The announcement, made during a review meeting chaired by Sharif, signals a significant expansion of the government's initial proposal to privatise only loss-making state firms, according to media reports. The decision comes as Pakistan starts negotiations with the International Monetary Fund (IMF) for a new long-term Extended Fund Facility (EFF).
Addressing the meeting, Sharif emphasised that the government's role is to create a conducive environment for business and investment rather than directly engaging in business activities. He directed all ministries to collaborate with the Privatisation Commission to facilitate the process.
Key among the enterprises slated for privatisation is the Pakistan International Airlines (PIA), a perennially loss-making entity that has been a significant drain on the country's finances. Sharif ordered that the privatisation of PIA be televised, ensuring transparency throughout the bidding and sale process.
PIA, which requires 11.5 billion Pakistani rupees per month solely for debt servicing alone, stands as one of Pakistan's top public sector loss-making entities. The privatisation process of other institutions will also be broadcast live to maintain transparency and accountability.
A roadmap outlining the Privatisation Programme 2024-2029 was presented during the meeting, detailing the prioritisation of loss-making SOEs for privatisation, The Express Tribune newspaper reported. The government aims to expedite the sell-off process by appointing a pre-qualified panel of experts within the Privatisation Commission.
The move towards privatisation has been advocated by the Sharif-led government as a necessary step to alleviate the financial strain on the country, the Dawn newspaper repoted.
Pakistan’s Finance Minister Muhammad Aurangzeb emphasised the importance of privatisation in achieving economic stability during the Pre-Budget Conference 2024-25. "You have to move towards privatisation if you want economic stability in the country."
The government's decision to limit its involvement to strategic and essential SOEs aligns with recommendations from international institutions like the IMF, which has long urged Pakistan to pursue privatisation to address its fiscal challenges.
While Pakistan has made strides in stabilising its economy, challenges persist, including a high fiscal shortfall and stagnant growth. Despite efforts to control the external account deficit, growth remains subdued, with expectations of only marginal improvement compared to previous years.
Last summer, Pakistan teetered on the brink of default, narrowly avoiding a financial crisis. Since then, the economy has found stability following the conclusion of the previous IMF programme. Notably, inflation has seen a significant decline, dropping to approximately 17% in April from a staggering peak of 38% recorded last May.
With agency inputs
