Pakistan to Privatize All State-Owned Enterprises
Faced with severe financial challenges, Pakistan’s Prime Minister Shehbaz Sharif announced on Tuesday that the country will privatize all state-owned enterprises (SOEs), including the troubled Pakistan International Airlines (PIA). This decision marks a significant expansion from the government’s previous plan to privatize only loss-making SOEs.
The announcement follows the commencement of negotiations between Pakistan and the International Monetary Fund (IMF) for a new Extended Fund Facility (EFF). During a review meeting on the privatization process of loss-making SOEs, Prime Minister Sharif emphasized that all entities except strategic ones will be privatized, regardless of their financial performance.
He stressed that the government’s role should be to foster a favorable environment for businesses and investment, rather than engaging in direct business operations. Accordingly, he directed all ministries to cooperate with the Privatisation Commission and take necessary actions to facilitate the privatization process.
To ensure transparency, Prime Minister Sharif ordered that the privatization of PIA, which is in its final stages, be televised, including the bidding and other crucial steps. The struggling national airline has emerged as one of Pakistan’s largest public sector loss-makers, requiring a hefty monthly expenditure of 11.5 billion rupees for debt servicing.
A roadmap for the Privatisation Programme 2024-2029 was also unveiled during the meeting. According to reports, ministers were informed that loss-making SOEs will be prioritized for privatization, and a pre-qualified panel of experts will be appointed to the Privatisation Commission to expedite the process.
The move towards privatization is part of the Prime Minister Sharif-led government’s efforts to address the burden on the exchequer and the prevailing financial crunch. Previously, Pakistan planned to privatize only loss-making SOEs. However, the government has now recognized the need to expand the scope of privatization to improve economic stability.
Finance Minister Muhammad Aurangzeb reiterated the importance of privatization, stating that it is essential for achieving economic stability in Pakistan. The Washington-based IMF has consistently recommended privatization for Pakistan, which faces a significant fiscal shortfall.
Despite narrowly avoiding default last summer and stabilizing the economy following the conclusion of the previous IMF program, Pakistan continues to grapple with a considerable fiscal deficit. While import control measures have helped control the external account deficit, they have also led to stagnant growth. Growth is projected to remain around 2% this year, compared to negative growth last year.
