ISLAMABAD: Pakistan’s state-owned enterprises (SOEs) reform agenda must now move from legal and governance changes to actual privatisation and private sector participation while advancing SOE reforms and the privatization agenda is essential for improving governance, increasing efficiency and strengthening Pakistan’s business environment.
This was stated in the documents uploaded on the International Monetary Fund’s (IMF) website on the second review under the Extended Fund Facility with a warning that scaling back the state’s footprint remains central to improving service delivery, reducing fiscal risks and creating space for private investment.
Structural reforms remain critical for generating sustainable growth and attracting high-impact private investment; and other priorities include completing SOE reforms and privatisation, enhancing the business environment and eliminating distortions and unnecessary regulations, the report added.
It was acknowledged that Pakistan has made progress in bringing state-owned entities under the SOE Act, but added that the reform programme will require sustained political commitment and stronger institutional capacity.
The authorities sent six amendments to SOE-dedicated laws to parliament in January 2026 to fully align them with SOE Act provisions, while progress is continuing on the remaining three SOEs with dedicated laws, the report noted adding that the end-August 2026 structural benchmark requires amending laws for nine additional statutory SOEs to bring them in line with the SOE Act, the report stated.
It flagged the Sovereign Wealth Fund (SWF) as a key reform area adding that amendments to the SWF Act are aimed at ensuring that SOEs under SWF ownership revert to the SOE Act’s governance structures and that the SWF itself operates under governance and fiscal safeguards in line with international standards. The end-March 2026 benchmark on SWF amendments was not met, though the amendments are pending cabinet approval.
Privatization or sale of assets under the SWF, along with procurement processes, must be conducted through rules adopted and published by the SWF board, in line with international standards and best practices - such procedures should be open, competitive, transparent and non-discriminatory, with minimum disclosure requirements at every stage, including beneficial ownership.
The report further stated that SWF-owned SOEs must remain subject to the same governance and accountability standards as other SOEs. Fiscal safeguards should ensure that revenues from SWF and sub-fund operations go directly to the government and are not retained by the SWF, while any funds required for SWF investments should be allocated through the federal budgetary process.
The government is also conducting a rightsizing committee review of SOEs in phases, the report noted. In the first phase, ten SOEs have been included. Of these, four are in the process of being privatized, three are being wound up and three have been marked for due diligence, which is to be completed by end-July 2026. The authorities plan to complete the review of all SOEs by end-June 2027.
It noted that authorities have adopted and published a preliminary public service obligation framework, which will guide the pilot incorporation of PSO agreements for the seven largest public service obligations into the FY27 budget. The government is required to sign PSO agreements with each of the seven largest PSOs before the submission of the FY27 budget to parliament.
The report also connected SOE reforms with procurement transparency. It said SOEs will be encouraged to develop procurement rules that would help incorporate SOE procurement into e-PADS, while proposed amendments to Public Procurement Regulatory Authority rules would remove preferences for SOEs in the award of public procurement contracts without competition, except under limited and reasonable exceptions.
The IMF said implementation of the SOE governance framework is also moving forward. As of March 2026, thirty-four SOEs had adopted and published business plans and statements of corporate intent, while 39 SOEs had issued IFRS-compliant financial statements. The report stated that the Central Monitoring Unit, now fully staffed, will have to closely monitor the quality of SOE reporting.
Copyright Business Recorder, 2026
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