IMF review prompts fresh focus on state-owned enterprise losses

ISLAMABAD: As the International Monetary Fund (IMF) conducts its first review of the $3 billion stand-by arrangement in Islamabad, the finance ministry has been requested to provide the most recent data concerning the losses incurred by state-owned enterprises (SOEs).

The request came during discussions between the two sides, addressing a range of issues related to Pakistan’s economy and the conditions set by the IMF to reduce the fiscal deficit, according to sources.

While Islamabad has already complied with demands to raise power and gas prices, the privatization of loss-making SOEs remains a top priority on the agenda.

The Finance Ministry, on the other hand, has sought time from the IMF for submission of the report by December 2023, sources added.

In its reply to the Fund’s delegation, the team said that government-owned enterprises are currently under scrutiny and the new statistical report will soon be completed, the sources said.

IMF seeks report on Rs 6,670 billion revenue collection targets

The timing of the IMF team’s arrival coincided with a weeks-long disruption of Pakistan International Airline (PIA) operations, leading to the cancellation of hundreds of flights. The national flag carrier faced difficulties in procuring fuel due to resource constraints. The crisis was resolved only after the Pakistan State Oil (PSO) agreed to resume jet fuel supply following an agreement with PIA to raise the debt limit.

In contrast, the Privatization Commission disclosed that there was a lack of interest in acquiring Pakistan Steel Mills (PSM) due to its substantial accumulated losses, which have continued to mount despite its closure in 2015.

During the ongoing review, the IMF team, led by Nathan Porter, IMF Mission Chief to Pakistan, rejected older data and examined the performance of the central monitoring unit. This unit was formed as part of the IMF deal to oversee SOEs’ affairs, and the IMF requested it to provide its initial review.

Sources indicate that the IMF representatives were informed that the latest financial figures related to the SOEs are under examination and review. The report containing the most up-to-date data will be forwarded to the IMF team next month.