In a bold move to tackle Pakistan’s financial challenges, Prime Minister Shehbaz Sharif announced on Tuesday plans to privatize all state-owned enterprises (SOEs), including the struggling Pakistan International Airlines (PIA).
This decision marks a significant expansion of the government’s previous intention to privatize only loss-making state firms. The announcement, made during a review meeting on the privatization process of SOEs, underscores Pakistan’s commitment to economic reform and comes as the country seeks a new long-term Extended Fund Facility (EFF) from the International Monetary Fund (IMF).
Privatization Drive to Include All State-Owned Enterprises
During the review meeting chaired by Prime Minister Sharif, it was emphasized that all SOEs, except for strategic ones, will be privatized. This move reflects a fundamental shift in the government’s approach, prioritizing efficiency and private sector involvement over state control.
Sharif reiterated that the government’s role should be to facilitate a business and investment-friendly environment rather than engage in business operations directly. To ensure transparency in the privatization process, Sharif instructed that the privatization of PIA, as well as other institutions, will be televised, allowing the public to witness the bidding and other crucial steps.
According to media reports, PIA’s privatization is in its final stage, with the airline requiring a monthly expenditure of ₹11.5 billion for debt servicing.
Roadmap for Privatization Programme 2024-2029 Unveiled
During the meeting, officials presented a roadmap for the Privatization Programme 2024-2029, outlining the government’s strategy for the coming years. Officials briefed ministers that they would prioritize the privatization of loss-making SOEs, with measures in place to expedite the sell-off process.
Additionally, the Privatization Commission is appointing a pre-qualified panel of experts to facilitate the swift execution of privatization initiatives. The Sharif-led government’s push for privatization aims to alleviate the burden on the exchequer and address the prevailing financial crunch faced by the country.
Financial Stability Through Privatization
Finance Minister Muhammad Aurangzeb emphasized the necessity of privatization for achieving economic stability during the Pre-Budget Conference 2024-25. Aurangzeb highlighted that privatization is a crucial step towards economic stability, echoing the sentiment echoed by the IMF.
The Washington-based IMF has long recommended privatization for Pakistan, which continues to grapple with a significant fiscal shortfall. Despite recent improvements in the economy, including a drop in inflation and stabilization of the economy, Pakistan faces a considerable fiscal deficit.
Import control measures have helped rein in the external account deficit, albeit at the cost of stagnant growth. Economists project that economic growth will hover around 2 per cent this year, marking a modest improvement compared to the negative growth experienced last year.
Prime Minister Shehbaz Sharif’s announcement of an ambitious privatization plan signals a decisive step towards economic reform in Pakistan. By prioritizing efficiency and private sector involvement, the government aims to alleviate financial pressures and foster a conducive environment for sustainable growth.
As the country embarks on this privatization drive, transparency and accountability will be paramount to ensure the success of these initiatives and restore confidence in Pakistan’s economy.
