File photo of Finance Minister Miftah Ismail
Finance Minister Miftah Ismail on Wednesday confirmed the government was amending laws to allow for the sale of shares of publicly listed state-owned entities to “friendly countries” and help overcome a $4 billion financing gap in the budget for the current fiscal year.
While he did not specify the law, the federal cabinet approved the Inter-Government Commercial Transaction Act, 2022 a few hours later to allow for commercial transactions on a government-to-government basis. This, said Ismail, was not covered in the existing privatization law.
Addressing a seminar on corporate governance of state-owned enterprises, the minister said Pakistan had a persistent issue with such entities, as some were badly managed, while others were essential for service delivery but were creating more hurdles than solutions to existing problems. Acknowledging that most state-owned enterprises had “professional” people at their helm, he regretted they were unable to perform due to laws and governance structures that restricted their abilities. Under this view, he said, their functioning could improve with better laws and governance structures.
Ismail said there had been no visible progress on privatization for decades despite some entities being on the privatization list since the 1990s. He stressed that the new laws would allow for the sale of shares with a buyback option, noting this would enable the government to regain its shares once its economic conditions had improved. “We are only selling shares traded at the stock exchange and only a little bit of each of them,” he said. “We are not selling majority shares or ownership shares and we are selling a small number of shares on buyback option,” he added. The existing laws, he regretted, provided people an excuse to not perform.
During his speech, the minister announced the government intended to end an ongoing ban on imports in a few weeks, noting it had created difficulties for the public. He also reiterated that all prior actions agreed upon under the staff-level agreement with the International Monetary Fund (IMF) had been completed and the government expected to receive the next tranche around the end of August.
Referring to NAB [National Accountability Bureau], Ismail said that fear of the accountability watchdog had prevented ministers and officers in the previous government from taking decisions and booking future orders for LNG. He noted that NAB had been in place for over 20 years but had failed to reduce corruption. Similarly, he said, there had been Public Procurement Regulatory Authority (PPRA) laws for over 20 years but it was still unclear if this had resulted in reducing procurement costs.