The federal government has failed to meet its commitment to the International Monetary Fund (IMF) under the $7 billion Extended Fund Facility (EFF) to reform state-owned enterprises (SOEs) under a new legal framework, a key commitment made when the IMF board approved the bailout in 2024.
According to a news report by The Express Tribune, resistance from key public sector firms, including Pakistan Railways, the Water and Power Development Authority (Wapda), and the Pakistan Telecommunication Corporation, has hindered the reform progress and stalled efforts to separate policymaking from operations.
The government had promised to the IMF to implement international best practices, address governance shortcomings, and privatize SOEs to reduce losses and improve service delivery. However, one year into the program, no entities have been privatized, and the legal frameworks for these firms remain largely unchanged.
Despite meeting fiscal targets such as achieving a primary balance through higher revenue collection and fiscal adjustments, Pakistan’s public debt has surged both in absolute terms and as a percentage of GDP, undermining the country’s economic stability. The debt-to-GDP ratio has risen above 70%, and the total debt burden has now climbed to Rs 80.5 trillion.
The government had promised to extend the State-Owned Enterprises (Governance and Operations) Act, 2023, and the SOE (Ownership and Management) Policy, 2023, to include 10 additional entities. These include the National Bank of Pakistan (NBP), Pakistan Railways, and Wapda, among others. However, significant delays in amending these laws, particularly for entities under the finance ministry, have prevented progress.
The finance ministry has only managed to finalize a draft bill for the EXIM Bank of Pakistan, while amendments to the NBP Act remain pending. The government had originally set a deadline for December 2024 to amend the Pakistan Sovereign Wealth Fund Act, which would govern NBP and other key SOEs, but that deadline has now been extended to March 2026.
The IMF has emphasized that the sovereign wealth fund, which is part of the government’s plan to manage assets, can only become operational once governance safeguards for SOEs are in place. The IMF has also noted that the legal amendments to ensure stronger governance in these entities must be clarified to align with the new SOE governance framework.
Wapda, which has been a major player in Pakistan’s energy sector, has not submitted the required amendments to its administrative structure, further delaying the process. Similarly, Pakistan Railways and the Ministry of Information Technology have yet to finalize the necessary draft amendments to their respective laws.
The IMF is expected to conduct a review of Pakistan’s progress starting September 25, and the government is facing increasing pressure to meet the outlined conditions if it hopes to secure the next tranche of the loan.
While some legal amendments have been finalized, many still await approval in parliament, with key sectors like the ports and telecommunications awaiting the necessary changes to strengthen their governance.
