Shahzaz ud din
SENIOR MEMBER
- Joined
- Jun 12, 2017
- Messages
- 7,877
- Reaction score
- 14
- Country
- Location
Pakistan considers mass privatisation drive as it seeks IMF bailout
Farhan Bokhari in Islamabad and Kiran Stacey
Imran Khan will place all of Pakistan’s state-owned companies into a special fund to be managed at arm’s length from the government soon after taking office, his proposed finance minister has said, in a first step towards mass privatisation.
Asad Umar told the Financial Times that one of the first acts of the new government would be to move some of the country’s biggest companies, including its national airline, away from government control.
Mr Umar, the former chief executive of the Pakistani conglomerate Engro, was Mr Khan’s shadow finance minister in opposition.
The plan to remove government control from about 200 companies would prepare the ground for an eventual bailout by the IMF, one of several options Mr Umar said were being looked at as the country battles a foreign currency crisis.
“[The] corporations will all be put in a wealth fund, which will be led by people from the private sector. We plan to transfer government owned companies under the control of the wealth fund within our first 100 days,” he said.
The fund’s job, he said, would be to cut the companies’ losses and debts before deciding which can be privatised and which will take longer to restructure. He mentioned Pakistan International Airlines, which has total liabilities of Rs406bn ($3.3bn), as one company where the debt burden needed to be reduced.
He did not say how the debts would be accounted for in the meantime.
The comments are the first time Mr Umar has spoken about his proposed economic programme since Mr Khan’s Pakistan Tehreek-e-Insaf won last month’s election.
The country’s former cricket captain won convincingly, but fell short of an absolute majority with 115 seats out of 272 that were contested. He has spent the subsequent days negotiating with smaller parties that might make up part of a governing coalition.
Despite the uncertainty about the make-up of the government, Mr Khan’s allies are already planning for how to deal with the country’s balance of payments problem. Persistently low exports and high imports have depleted Pakistan’s reserves of foreign currency to such a level that they no longer cover even two months’ worth of imports.
Mr Umar said the new government would have to formulate a plan immediately after taking office.
“We will have weeks, not months,” he said. “You have to be decisive and move fast. Right now, we’re looking at all options.”
Civil servants have already drawn up plans for Pakistan to approach the IMF for a loan of up to $12bn, which would be the country’s 13th bailout from the fund and its largest ever.
The last time Pakistan went to the IMF, Islamabad agreed to earmark 68 companies for privatisation, including PIA, in return for a loan of $6.7bn. But the process stalled after the government sold stakes in a few profitmaking companies.
Pakistani officials hope the PTI’s plan for a new fund will help persuade the IMF that it is serious about privatising state-owned companies — though geopolitical concerns might still get in the way of agreeing a bailout.
Earlier this week, Mike Pompeo, US secretary of state, warned that IMF money should not be used to bail out unsustainable loans made by Beijing as part of China’s plans to spend $60bn upgrading Pakistan’s infrastructure.
Islamabad expects that if it takes out an IMF loan it will have to publish full details of the terms of the Chinese loans — something Beijing has so far refused to do.
Recommended
Mark Sobel, a former US representative to the fund, said: “Were Pakistan to seek a fund programme, there will need to be a very thorough discussion about external financing/debt and its terms.”
Mr Umar said he did not believe Mr Pompeo’s concerns would present a hurdle to an eventual IMF programme. “Right now, no option, including the IMF, can be ruled out,” he said, adding: “Mike Pompeo’s statement was more about China than Pakistan.”
But he said he was also looking at several alternatives to shore up the country’s dwindling foreign exchange reserves.
“We are looking at options including raising money from the Pakistani diaspora, new sukuk [Islamic] bonds and requesting Saudi Arabia to defer our oil payments,” he said.
Source
Farhan Bokhari in Islamabad and Kiran Stacey
Imran Khan will place all of Pakistan’s state-owned companies into a special fund to be managed at arm’s length from the government soon after taking office, his proposed finance minister has said, in a first step towards mass privatisation.
Asad Umar told the Financial Times that one of the first acts of the new government would be to move some of the country’s biggest companies, including its national airline, away from government control.
Mr Umar, the former chief executive of the Pakistani conglomerate Engro, was Mr Khan’s shadow finance minister in opposition.
The plan to remove government control from about 200 companies would prepare the ground for an eventual bailout by the IMF, one of several options Mr Umar said were being looked at as the country battles a foreign currency crisis.
“[The] corporations will all be put in a wealth fund, which will be led by people from the private sector. We plan to transfer government owned companies under the control of the wealth fund within our first 100 days,” he said.
The fund’s job, he said, would be to cut the companies’ losses and debts before deciding which can be privatised and which will take longer to restructure. He mentioned Pakistan International Airlines, which has total liabilities of Rs406bn ($3.3bn), as one company where the debt burden needed to be reduced.
He did not say how the debts would be accounted for in the meantime.
The comments are the first time Mr Umar has spoken about his proposed economic programme since Mr Khan’s Pakistan Tehreek-e-Insaf won last month’s election.
The country’s former cricket captain won convincingly, but fell short of an absolute majority with 115 seats out of 272 that were contested. He has spent the subsequent days negotiating with smaller parties that might make up part of a governing coalition.
Despite the uncertainty about the make-up of the government, Mr Khan’s allies are already planning for how to deal with the country’s balance of payments problem. Persistently low exports and high imports have depleted Pakistan’s reserves of foreign currency to such a level that they no longer cover even two months’ worth of imports.
Mr Umar said the new government would have to formulate a plan immediately after taking office.
“We will have weeks, not months,” he said. “You have to be decisive and move fast. Right now, we’re looking at all options.”
Civil servants have already drawn up plans for Pakistan to approach the IMF for a loan of up to $12bn, which would be the country’s 13th bailout from the fund and its largest ever.
The last time Pakistan went to the IMF, Islamabad agreed to earmark 68 companies for privatisation, including PIA, in return for a loan of $6.7bn. But the process stalled after the government sold stakes in a few profitmaking companies.
Pakistani officials hope the PTI’s plan for a new fund will help persuade the IMF that it is serious about privatising state-owned companies — though geopolitical concerns might still get in the way of agreeing a bailout.
Earlier this week, Mike Pompeo, US secretary of state, warned that IMF money should not be used to bail out unsustainable loans made by Beijing as part of China’s plans to spend $60bn upgrading Pakistan’s infrastructure.
Islamabad expects that if it takes out an IMF loan it will have to publish full details of the terms of the Chinese loans — something Beijing has so far refused to do.
Recommended
Mark Sobel, a former US representative to the fund, said: “Were Pakistan to seek a fund programme, there will need to be a very thorough discussion about external financing/debt and its terms.”
Mr Umar said he did not believe Mr Pompeo’s concerns would present a hurdle to an eventual IMF programme. “Right now, no option, including the IMF, can be ruled out,” he said, adding: “Mike Pompeo’s statement was more about China than Pakistan.”
But he said he was also looking at several alternatives to shore up the country’s dwindling foreign exchange reserves.
“We are looking at options including raising money from the Pakistani diaspora, new sukuk [Islamic] bonds and requesting Saudi Arabia to defer our oil payments,” he said.
Source
