Pakistan’s new minister for privatization and investments, Abdul Aleem Khan, has called for improving governance at state-owned companies and said at least 15-20 loss-making public entities needed to be put up for privatization immediately.
In the past, elected governments have shied away from undertaking unpopular reforms, including the sale of entities like Pakistan International Airlines, the flag carrier. But Pakistan, in deep economic crisis, agreed last June to overhaul loss-making state-owned enterprises under a deal with the International Monetary Fund (IMF) for a $3 billion bailout.
Last September, the then caretaker government of Prime Minister Anwaar-ul-Haq Kakar vowed to improve governance at state-owned companies and earmarked 10 for privatization or turnaround efforts.
“In the present circumstances of the economy, 15 to 20 institutions must be privatized immediately,” Khan was quoted as saying in a statement from his office on Thursday.
Among key institutions to privatize are PIA, the national airline, with debts and liabilities of Rs180.6 billion as of September 2023, followed by Pakistan Water & Power Development Authority at Rs92.6 billion and Pakistan Steel Mills at Rs40. 3 billion.
“Deficit of PIA for the last five years is 500 billion rupees, which has no justification,” Khan said.
“Privatization of loss-making institutions is not a matter of convincing anyone, but it is a question of the survival of our country’s economy and decisions must be made including.”
Besides operational and technical measures for PIA’s divestment, the last caretaker government also amended a 2016 law that had blocked selling off its majority shares, according to a draft posted on the Pakistan parliament’s website.
In a report in mid-January, the IMF expressed satisfaction over measures initiated by the Kakar caretaker government to accelerate reforms of state-owned enterprises, specifically mentioning the amendment to the PIA privatization law.
Progress on privatization will be a key issue when the new government of Prime Minister Shehbaz Sharif goes back to the IMF once the current bailout program expires this month. Sharif has already directed his finance team, headed by newly installed Finance Minister Muhammad Aurangzeb, to initiate work on seeking an Extended Fund Facility (EFF) after the current standby arrangement expires on April 11.
