Government decides to put underperforming state financial bodies on trial

The federal government has launched one of its most ambitious restructurings of financial institutions in recent memory. At the centre of this effort is the Cabinet Committee on Rightsizing, which has instructed the Finance Division to reassess and potentially wind up several state-linked financial bodies that were born out of past policy imperatives but are now redundant or underperforming.

At the center of this are seven Joint Investment Companies (JICs) but this initiative also targets several other underperforming financial institutions. The operation itself reflects an uneasy truth of Pakistan’s public finances, where, after decades of chronic deficiencies in revenue generation and institutional inefficiency, policymakers have stopped gunning for their growth and instead are scrambling for a lighter, more responsive state capable of delivering services without perpetually borrowing to survive. 

Pakistan’s economy, which was once teetering under spiralling inflation and weak reserves, has only recently shown signs of stabilisation, thanks in part to tighter monetary policy and a renewed focus on public financial management reforms.

Sources told Profit that successive governments had established these Joint Investment Companies including Pakistan Domestic Sukuk Company Limited (PDSCL), Pakistan Mortgage Refinance Company Limited (PMRC), Pakistan Infrastructure Finance Company Limited (PIFCL), Pakistan Energy Sukuk Company Limited (PESCO), Pakistan International Sukuk Company Limited (PISC), Pakistan Development Fund Limited (PDFL), and Pakistan SME Finance Company. The committee has now raised concerns over their continued relevance and performance.