Prime Minister Shehbaz Sharif said on Tuesday that Pakistan would privatize all state-owned enterprises except strategic ones, expanding on an initial plan to sell only loss-making state-owned enterprises to shore up precarious finances.
The announcement was made after Sharif According to a statement from his office, he led a review meeting on the privatization process of loss-making state-owned enterprises (SOEs) and discussed the privatization roadmap from 2024 to 2029.
“All state-owned enterprises will be privatized, whether they are in surplus or in deficit,” Sharif said, adding that reducing the burden on state-owned enterprises would save taxpayers money.
The statement did not specify which sectors would be considered strategic or non-strategic.
The announcement comes after Pakistan completed a $3 billion standby agreement last month that averted a sovereign debt default, with an International Monetary Fund (IMF) mission in Islamabad to discuss a new Extended Extended Fund Facility (EFF). It took place the day after it started. last summer.
Privatization of loss-making state-owned enterprises has long been on the IMF’s list of recommendations for Pakistan, which suffers from large fiscal shortfalls and huge external funding shortfalls. Foreign exchange reserves are hardly sufficient to cover import restrictions for up to several months.
The IMF says Pakistan’s state-owned enterprises hold large amounts of assets compared to most Middle Eastern countries, accounting for 44% of GDP in 2019, but account for a relatively small share of employment in the economy. . The fund estimates that almost half of state-owned enterprises operated at a loss in 2019.
Success so far has been patchy
Market players say past privatization drives have been patchy, largely due to a lack of political will.
Former privatization minister Fawad Hassan Fawad told Reuters on Tuesday that an organization that engages in purely commercial work cannot be strategic by its nature, and that there can be no strategic commercial state-owned enterprises. He said that means no.
“So for me, strategic state-owned enterprises don’t really exist,” he said.
“The sooner we get rid of them the better. But this is not the first time we have heard this statement from the Prime Minister and it may not be the last until these words are translated into a strategic action plan and implemented. unknown.”
For years, Islamabad has poured billions of dollars into trying to keep state-owned companies afloat as they drain cash, including Pakistan International Airlines, one of its biggest loss-makers. The company is in the final stages of selling, with a closing date set for later this week. We seek expressions of interest from potential buyers.
The privatization ministry said at a meeting on Tuesday that the pre-screening process for the sale of PIA will be completed by the end of May, adding that talks are underway for the sale of New York’s Roosevelt Hotel, owned by the airline.
It also said a government-to-government deal for First Women’s Bank was under discussion with the United Arab Emirates, adding that the 2024-2029 privatization plan also included the electricity distribution company.
“State-owned enterprises that are in the red should be privatized on a priority basis,” Sharif said.
