Pakistan will sell all state-owned businesses, barring strategic ones, Prime Minister Shehbaz Sharif has announced. This decision will expand the nation’s original intention to sell only loss-making state enterprises, to strengthen the country’s precarious economy.
The move was taken following a review meeting of the process of privatising loss-making state businesses that Sharif presided over. The discussion covered a roadmap for privatisation that would take place between 2024 and 2029. “No matter how much money they make or lose, all state-owned enterprises will be privatised,” Sharif declared. Doing away with state owned enterprises would save taxpayers’ money, he added.
The announcement did not make it clear which industries would be classified as strategic and non-strategic.
The statement came a day after an IMF mission in Islamabad kicked off talks for a new, long-term Extended Fund Facility (EFF). Pakistan finished a $3 billion standby agreement last month, which prevented a sovereign debt default last summer. The IMF has long recommended for Pakistan that loss-making state enterprises be privatised. The country is grappling with a significant fiscal imbalance and a large gap in external financing. Foreign exchange reserves are barely enough to cover restricted imports for a few months.
The IMF says state enterprises in Pakistan have substantial assets—44 per cent of GDP in 2019—compared to most Middle Eastern nations. But their proportion of employment in the total economy is comparatively low. According to the Fund’s estimates, about half of the enterprises were at a loss in 2019.
Market observers point out that previous privatisation efforts have been uneven, primarily because of a lack of political will.
There cannot be any strategic commercial state enterprises because any organisation engaged in solely commercial activity cannot be strategic by definition, former Privatisation Minister Fawad Hasan Fawad said. “So to me there are really no strategic state enterprises,” he opined. “The sooner we get rid of them, the better. But this isn’t the first time we have heard a PM say this and this may not be the last till these words are translated into a strategic action plan and implemented,” he added.
(With inputs from Reuters)
