The concerned government of Pakistan is making efforts to improve the organization and coordination of state-owned companies under the International Monetary Fund (IMF) bailout package. In this regard, it has identified ten companies or entities for restructuring.
Under the $3 billion IMF bailout package, state-owned enterprises (SOEs) will require strong governance as their losses are draining the national treasury. It should be noted that this package from international financial institutions was crucial to prevent Pakistan’s default on its sovereign loans.
Caretaker Finance Minister Dr. Shamshad Akhtar, in a press conference held in Karachi on Thursday, revealed that by the end of 2020, the accumulated losses of SOEs stood at 500 billion rupees (approximately $1.74 billion). He mentioned that under the government’s proposed policy, the appointment of directors for SOEs would be made through a nominating process, and no ministry could issue directives to improve governance at SOEs.
Subsequently, Caretaker Minister for Privatization, Fawwad Hassan Fawwad stated that only one bidder remains for Pakistan Steel Mills (PSM). He explained that before COVID-19, there were four companies interested in bidding for PSM, but three, including global steel giants, withdrew for various reasons.
Fawwad, the Adviser to the Prime Minister on Commerce, disclosed that the government is in discussions with financial planners for the transaction of several state assets. He clarified that the discussions were limited to the sale of operational assets of Pakistan Steel Mills.
Pakistan is also considering outsourcing several of its state-owned assets to external companies. In March, it initiated the outsourcing of operations and management of three major airports and ground facilities under a public-private partnership to generate reserves for the struggling economy.
In the budget for the fiscal year 2024, the government has allocated a budget of only 15 billion Pakistani rupees (approximately $52.42 million) for receipts from privatization, reflecting the impact of the economic downturn caused by the pandemic on privatization efforts.
