The federal government has committed with the International Monetary Fund (IMF) in the first review of IMF's Pakistan's extended fund facility that privatization of two RLNG power plants will be completed by end of financial year 2020, said a report released on Monday.
In review, the Fund has stressed the government to accelerate efforts to improve governance, transparency and efficiency of state-owned entities (SOEs). Pakistan has expected to finalize the process of privatization by end of financial year 2020. Financial advisors were appointed for the privatization of two LNG fired power plants and the transaction structure was approved.
In the review, Pakistan stated that the international auditors have been hired to conduct audit of Pakistan International Airlines (PIA) and Pakistan Steel Mills (PSM) for 2018 accounts. Work is underway to complete and publish the audit of the 2018 accounts by end-December 2019 (end-December 2019 SB). Technical assistance provided by the IMF is underway to support the development of a new State-Owned Enterprise Law (end-September 2020 SB).
Pakistan is still in the process of designing strategy and criteria to classify SOEs into companies for sale, liquidation, or retaining under state ownership (end-September 2020 SB), the authorities plan to engage international partners to support these efforts.
The government will proceed with the liquidation of one small state-owned bank in September 2019 and included another small state-owned bank in the government's privatization list. Moreover, the government will ensure that the remaining two private sector banks meet the minimum capital requirements by end-June 2020.
"We (Pakistan) also recognize the need to address gaps in our bank resolution and crisis management frameworks, including the deposit insurance scheme. Thereby, we will submit, supported by IMF technical assistance, legislation to Parliament by end-May 2020 aimed at strengthening and modernizing our resolution frameworks," the report stated. The government will reduce the stock of outstanding payables through the use of power assets privatization proceeds.
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