Islamabad:
While the first year of the $ 7 billion International Monetary Fund Program (IMF) will end, the Government has failed to bring public enterprises (public enterprises) as part of a new legal framework, violate its commitments due to the resistance of these public sector companies.
The procedure for a preparatory meeting recently held for the next TMI reviews for the $ 1 billion loan tranche has revealed that there had been almost negligible progress in improving the governance of public sector companies and regulatory organizations, sources of the Ministry of Finance at The Express PK Press Club said.
They said that entities such as the Water and Power Development Authority (WAPDA), Pakistan Telecommunication Corporation and Pakistan Railways did not fully cooperate the modification of their laws to separate the development of operations policies.
A year ago, when the IMF board of directors approved the 7 -billion dollars rescue package for a three -year period, the government of Prime Minister Shehbaz Sharif promised to face the gaps in the legal frameworks of public enterprises. The idea was to introduce international best practices for rod loss and improve services.
But the government failed on both fronts. It has neither improved the legal framework for public enterprises nor succeeded in privatizing an entity during the first year of the IMF program. After finishing a year from the program and received $ 2 billion out of $ 7 billion, progress is limited to tax indicators.
Even on this front, despite the achievement of the main equilibrium objective thanks to a higher collection of income and budgetary adjustments, public debt jumped in absolute terms and in part of the economy during the last exercise, which is considered a double incrimination. The debt / GDP ratio exceeded 70%, while the debt burden increased to Rs80.5 Billion.
The Government had promised to the IMF that in the context of the implementation of SEE reforms, it would extend the law of 2023 to public state enterprises (governance and operations), and the policy of public enterprises (ownership and management), 2023, to 10 other entities to strengthen performance, transparency and governance.
These entities include Pakistan’s Exim Bank, the National Bank of Pakistan (NBP), State Life Insurance Corporation, Pakistan Railways, Wapda, National Telecommunication Corporation, Gwadar Port Authority, Karachi Port Trust and Port Qasim Authority.
Last month, the Minister of Finance, Muhammad Aurangzeb, wrote to colleagues ministers of maritime affairs, water resources, information and telecommunications technologies and trade ministries, urging them to fulfill the conditions of the IMF by providing the necessary legal changes before the visit of the IMF team.
The IMF delegation arrives in Pakistan and will hold its first series of discussions with the Central Bank on September 25 – the same date on which the IMF board of directors approved the loan package a year ago. After discussions with the central bank, negotiations with the federal government will start from September 29.
Among the entities listed, two are the administrative control of the Ministry of Finance: NBP and Exim Bank. However, instead of modifying their laws to resolve governance problems, the Ministry of Finance has only succeeded in finalizing the Exim Bank Bill.
Sources have indicated that changes to the NBP law remain unanswered until legal changes are made to the law of the Pakistan Sovereign Wealth Fund. The government had earlier exempt the NBP and six other entities from the SOE law by placing them under the sovereign heritage fund.
The initial deadline to modify the Sovereign Wealth Fund law was December of last year, now extended to March 2026.
The IMF has told Pakistan that the sovereign fund should only become operational after the fundraising guarantees of the fund and that public enterprises are transferred to it, aligning with the new SEE governance framework.
For this, the government will also have to modify the law on wealth funds to clarify its mandate and strengthen governance agreements, according to the latest IMF report.
Sources have also mentioned the reluctance of the WAPDA, which has not yet shared a project of the new amendments. These legal changes are necessary to revise its current administrative structure, dominated by the president of the authority.
The WAPDA spokesman did not respond to a request for comments concerning the delay in the required procedure, which violates the conditions of the IMF.
Likewise, the Ministry of Information Technologies has not shared project amendments to the 1996 law in Pakistan Telecommunication (reorganization). The law on the nationalization of life insurance is still under study – not yet approved, while consultations continue on the Pakistani rail law of 1890.
However, the plans for modifications to the QASIM AUTHORITY ACT 1973 port, the 2002 Gwadar Port Authority Order and the 1980 Karachi Port Authority law were finalized but still await parliamentary approval.
