ISLAMABAD: The federal government has set a target to complete, by June 2024, the bidding for Pakistan International Airlines (PIA)’s core business, of which, the government would likely seek to sell a (controlling) 51 percent stake.

This was pointed out in the International Monetary Fund (IMF)’s second and final review under the stand-by arrangement report, released on Friday.

The report says that Pakistan is moving forward with plans to privatise PIA and other assets and has advanced its broader privatisation agenda.

Several smaller SOEs are also currently on an active privatisation list.

Reforming and/ or privatising state-owned entities (SOEs) is the priority areas of future reform of the federal government.

To limit state balance sheet implications, the use of divestment proceeds would prioritise the settling of government-guaranteed debt—to be transferred from the PIA’s balance sheet to a holding company—held by commercial banks (Rs 242 billion, of a total of Rs 629 billion in liabilities to be transferred).

Pakistan has committed supporting a rebalancing from state- to private-led activity, through the removal of distortionary protection, subsidies, and concessions and reforms to improve SOE performance. This will include further progress on SOE reform through privatisation and restructuring, and seek to limit the role of the state, including in the setting of prices and through the provision of concessions/subsidies for economic activity.

Where privatisation is appropriate, as with PIA, the government assured that it will ensure that these plans are transparent and minimise impacts on the public balance sheet. The government will also further advance SOE governance reforms, including bringing the legal frameworks of all SOEs into line with the SOE Act in a phased manner, and further strengthening the operational capacity of the Central Monitoring Unit.

In the case of SOEs under the umbrella of the Sovereign Wealth Fund, we will ensure their governance frameworks are at least on par with the principles required by the SOE Act. We remain committed to ensuring the Special Investment Facilitation Council (SIFC) does not (i) create an uneven playing field, (ii) promise (or propose the government provide) incentives of any sort or guaranteed returns, or (iii) distort the investment landscape, says the report.

Copyright Business Recorder, 2024