Pakistan announces sweeping privatisation plan amid IMF loan negotiations

In an effort to revive the country's faltering economy, Pakistan's Prime Minister Shehbaz Sharif announcedplans on Tuesday (May 14)to privatise all state-owned enterprises (SOEs), with the exception of strategic ones. Thisinitiative is intended to ease the financial strain on the nation, which is facing majoreconomic troubes.

During a review meeting led by Prime Minister Shehbaz Sharif, it was announced that the government plans to privatise all state-owned enterprises, expanding beyond the initial proposal to privatise only loss-making firms, as reported by the media. This decision coincides with Pakistan's negotiations with the International Monetary Fund (IMF) for a new long-term Extended Fund Facility (EFF).

In his address, Sharif saidthat the government's primary role should be to foster a favourable environment for business and investment rather than participating directly in commercial activities. He instructed all ministries to work with the Privatisation Commission to support the process.

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Among the key enterprises set for privatisation is Pakistan International Airlines (PIA), a chronically loss-making entity thatburdens the national budget. Sharif mandated that the privatisation of PIA be broadcastlive to ensure transparency during the bidding and sale process.

PIA, which needs 11.5 billion Pakistani rupees monthly just for debt servicing, is one of the top public sector entities incurring substantial losses. The privatisation processes of other institutions will also be televised to maintain transparency.

Government unveils privatisation programme 2024-2029

A roadmap for the Privatisation Programme 2024-2029 was presented during the meeting, highlighting the prioritisation of loss-making state-owned enterprises (SOEs) for privatisation, according to The Express Tribune. To expedite the process, the government plans to appoint a pre-qualified panel of experts within the Privatisation Commission.

The move towards privatisation has been strongly advocated by the Sharif-led government as essential for alleviating the country's financial strain, The Dawn newspaper reported. Pakistan’s Finance Minister Muhammad Aurangzeb said, "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.

Despite making progress in stabilising its economy, Pakistan continues to face significant challenges, including a high fiscal shortfall and stagnant growth.

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Last summer, Pakistan narrowly avoided default, teetering on the brink of a financial crisis.

(With inputs from agencies)