IMF Reminds Pakistan to Keep An Eye On Its State Owned Entities

The International Monetary Fund (IMF) said that the “triage reform process” negotiated by the Government of Pakistan requires keeping all state-owned companies (SOEs) under Finance Ministry oversight, reported Reuters. “Following through on the previously agreed 2021 triage reform process, and other governance and private sector reforms, is important to durably attract foreign investment,” the IMF Resident Representative in Pakistan Esther Perez Ruiz said in a statement. She added that it was “premature to consider what will follow the current SBA, which runs through early 2024”. While outsourcing of SOEs wasn’t part of the IMF mandate for its $3 billion bailout, the current Standby Agreement is primarily focused on fiscal guidance to adjust and ensure debt sustainability, as well as a prompt return to the market-determined exchange rate for proper forex market functioning, an appropriately tight monetary policy aimed at disinflation, and further progress on structural reforms, primarily in the energy sector. Pakistan has time and time again discussed outsourcing multiple SOEs to foreign entities since last year. In March 2023, it began outsourcing operations and land assets at three major airports to a public-private partnership in an effort to build forex reserves. The Economic Coordination Committee (ECC) of the previous federal cabinet had approved the hiring of the International Finance Corporation (IFC) as a transaction adviser to outsource Karachi, Lahore, and Islamabad airports for at least 25 years.