Pakistan’s Prime Minister Shehbaz Sharif. File
| Photo Credit: Reuters

Cash-strapped Pakistan will privatise all state-owned enterprises, including the loss-making Pakistan International Airlines, Prime Minister Shehbaz Sharif announced on May 14, broadening the government’s initial plans to make only loss-making state firms private.

The announcement to privatise state-run enterprises barring strategic ones comes a day after Pakistan started negotiations with the International Monetary Fund (IMF) for a new long-term Extended Fund Facility (EFF).

Mr. Sharif announced this while chairing a review meeting on the privatisation process of loss-making state-owned enterprises (SOEs), according to media reports.

During the meeting, he said that apart from strategic state-owned firms, all other enterprises — profitable or loss-making — will be privatised, Geo News reported.

Asserting that the government’s job is not to do business but to ensure a business and investment-friendly environment, Mr. Sharif directed all ministries to take action and cooperate with the Privatisation Commission.

Underscoring the need for the privatisation process to be transparent, he ordered the privatisation process of Pakistan International Airlines (PIA) to be televised, including the bidding and other important steps. The PIA’s privatisation is in its final stage, the report said.

Pakistan’s ailing national flag carrier stood as the country’s third-highest public sector loss-making entity, requiring Pakistani Rs. 11.5 billion per month solely for servicing its debts.

The process of privatisation of other institutions will also be broadcast live, the report said.

A roadmap of the Privatisation Programme 2024-2029 was also presented during the meeting, The Express Tribune newspaper reported.

Ministers were informed that loss-making SOEs were to be privatised on a priority basis and that a pre-qualified panel of experts was being appointed in the Privatisation Commission to speed up the sell-off process, the report said.

Prime Minister Sharif-led government has pushed for the privatisation of several state-owned enterprises to tackle the burden on the exchequer and the prevailing financial crunch.

Previously, debt-struck Pakistan had plans to privatise only loss-making state-owned enterprises, the Dawn newspaper reported.

On May 12, Finance Minister Muhammad Aurangzeb said that privatisation is necessary to achieve economic stability in the country.

“You have to move towards privatisation if you want economic stability in the country,” Mr. Aurangzeb said while speaking at the Pre-Budget Conference 2024-25 here.

Last week, Deputy Prime Minister Ishaq Dar said the government would limit its business only to strategic and essential SOEs under its domain and their number would be reduced from 40 after scrutiny.

Privatisation has long been on the Washington-based IMF’s list of recommendations for Pakistan, which is struggling with a high fiscal shortfall, the report said.

Pakistan narrowly averted default last summer, and the economy has stabilised after the completion of the last IMF programme, with inflation coming down to around 17% in April from a record high of 38% last May.

The country is still dealing with a high fiscal shortfall, and while the external account deficit has been controlled through import control mechanisms, it has come at the expense of stagnating growth, which is expected to be around 2% this year compared to negative growth last year.

Pakistan’s Prime Minister Shehbaz Sharif speaks at the World Economic Forum (WEF) in Riyadh, Saudi Arabia, April 28, 2024.
| Photo Credit: Reuters

Pakistan Prime Minister Shehbaz Sharif has met IMF chief Kristalina Georgieva and discussed a new loan programme for the cash-strapped country to put the economy back on track.

In a meeting on the sidelines of the World Economic Forum (WEF) Special Meeting in Riyadh, the premier thanked Ms. Georgieva, the International Monetary Fund (IMF) Managing Director, for her support to Pakistan in securing the USD 3 billion standby arrangement (SBA) from IMF last year that was now nearing its completion.

Pakistan secured the USD 3 billion IMF programme in June last year, which helped it avert a sovereign default.

Pakistan is seeking a new long-term Extended Fund Facility (EFF) after the current SBA expires this month.

“Both sides also discussed Pakistan entering into another IMF program to ensure that the gains made in the past year were consolidated and its economic growth trajectory remained positive,” according to a statement issued by the Pakistan PM’s office on Sunday.

Mr. Sharif reiterated his government’s commitment to put Pakistan’s economy back on track.

Finance Minister Muhammad Aurangzeb has said Islamabad could secure a staff-level agreement on the new programme by early July.

Islamabad says it is seeking a loan over at least three years to help achieve macroeconomic stability and execute long-overdue and painful structural reforms, though Aurangzeb has declined to detail what size of the programme the country seeks.

If secured, it would be Pakistan’s 24th IMF bailout.

The USD 350 billion economy faces a chronic balance of payments crisis, with nearly USD 24 billion to repay in debt and interest over the next fiscal year — three times more than its central bank’s foreign currency reserves, according to Geo News.

According to the state-run PTV News post on X, this was the first meeting between the prime minister and Georgieva since his re-election last month. They last met in Paris in June 2023 on the margins of the Summit for New Global Financial Pact.

The IMF Executive Board is expected to meet on April 29 to decide on the final tranche of USD 1.1 billion under SBA, the post said.

Ms. Georgieva appreciated the leadership of Mr. Sharif for timely securing SBA last year, according to the statement.

During the meeting, the prime minister said that he had directed his financial team to carry out structural reforms, ensure strict fiscal discipline and pursue prudent policies that would ensure macro-economic stability and sustained economic growth.

The IMF MD shared her institution’s perspective on the ongoing programme with the premier, including the review process.

Separately, Prime Minister Sharif highlighted the “global inequity” in healthcare while speaking at a panel discussion on ‘Redefining Global Health Agenda’ during the special meeting of WEF.

“Today, I think the first and foremost problem is global inequity,” he said, adding that the Covid-19 pandemic had “exposed” these imbalances and gaps. “Imagine the global North and the global South; distribution of vaccines and so on and so forth,” he said.

He further said that climate change had “completely changed the landscape. Pakistan does not contribute (to) even a fraction of emissions. Yet we are on the red list of climate change and in 2022, we experienced the worst floods in Pakistan (…)and we had to invest hundreds and billions of rupees to rehabilitate people.”

This is the prime minister’s second trip to Saudi Arabia in less than a month. He last went on a three-day visit to the kingdom, which was his first foreign visit since he was re-elected as premier.

Separately, Mr. Sharif held a meeting on Sunday with Islamic Development Bank (IDB) President Muhammad Sulaiman Al Jasser, where they both agreed upon the earliest completion of various ongoing projects of the IDB in Pakistan.

During the meeting, held on the sidelines of the WEF, the premier thanked the IDB for investing USD 1 billion in various projects during the previous PML-N-led tenure, a statement on PML-N’s X account said.