The federal government has failed to meet a key International Monetary Fund (IMF) condition to amend the Pakistan Sovereign Wealth Fund Act by December 2024, reported The Express Tribune. This delay risks straining the ongoing $7 billion IMF programme, which demands governance and transparency improvements in fiscal management.
According to a news report, the Ministry of Finance had committed to the IMF that it would revise the law to address governance structure issues and mandate competitive bidding for state asset sales. However, Ministry spokesperson Qumar Abbasi confirmed that the amendments were not finalized by the December deadline, despite extensive progress on the draft.
“We are finalising the necessary amendments to align the sovereign wealth fund law with international best practices and have been sharing updates with the IMF,” Abbasi said.
The Sovereign Wealth Fund Act, enacted in 2023, allows the government to transfer shares of seven major entities, including Oil and Gas Development Company (OGDCL) and Pakistan Petroleum Limited, to the fund for eventual sale. The IMF insists these entities must fall under the SOE governance framework and that revenues generated through the fund’s operations be deposited directly into the national exchequer.
Disagreements over the mode of amendments—via rules or binding legislation—have contributed to the delay. The government has argued that some changes can be implemented through rules, a position the IMF has rejected.
The IMF’s programme review, expected this quarter, will evaluate Pakistan’s compliance with the agreed conditions. This is the third missed target after the government failed to meet tax collection goals of Rs6.009 trillion and Rs23.4 billion from traders by December.
The IMF has pushed for legislative changes to strengthen the fund’s governance, prevent direct asset sales to foreign entities without competition, and ensure compliance with the State-Owned Enterprises (SOEs) Act. The global lender also seeks to prohibit the State Bank of Pakistan (SBP) from lending to the fund and restrict the fund from providing loans to government entities.
The Sovereign Wealth Fund currently manages domestic and foreign equity securities, debt instruments, and other financial assets. It is also empowered to participate in privatisation processes and public-private partnerships.
Proposed amendments would terminate these rights, limiting the fund’s role to asset management under stricter oversight.
Finance Minister Muhammad Aurangzeb, in a prior Letter of Intent to the IMF, had pledged to enhance the fund’s governance as part of broader SOE reforms aimed at reducing losses and improving efficiency.
However, the IMF remains firm on ensuring a level playing field for investments through robust governance standards.
