ISLAMABAD:The International Monetary Fund (IMF) has placed a significant condition to abolish the Pakistan Sovereign Wealth Fund (PSWF) as a prerequisite for qualifying for a new bailout package, aiming to ensure transparency and accountability in the financial affairs of the country’s seven profitable state-owned firms. Through an Act of Parliament, the government had transferred the ownership and assets of these highly profitable enterprises to the PSWF, which has now become a major point of contention in finalising the staff-level agreement with the IMF, according to government sources.
The IMF has immediately sought a commitment to abolish the Fund and set a September 30th deadline to repeal the Pakistan Sovereign Wealth Fund Act 2023, which governs the operations of the PSWF. Highly placed sources revealed to The Express Tribune that a meeting between IMF Mission Chief Nathan Porter and finance ministry officials was held on Monday but remained inconclusive, with the IMF steadfast in its demand to abolish the Fund. Pakistani authorities have sought more time to provide a final response, but it appears the government may have no choice but to agree to the IMF’s demand to bring transparency and accountability in the affairs of the seven companies.
The finance ministry’s spokesman, Qumar Abbasi, did not respond to The Express Tribune’s requests for comments.
The previous government had enacted the Pakistan Sovereign Wealth Fund Act to transfer the shares of seven profitable entities and then sell them overseas to raise money. The law states that the assets and profits of the Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited, Mari Petroleum, National Bank of Pakistan, Pakistan Development Fund, Government Holdings (Private) Limited, and Neelum-Jhelum Hydropower Company will be shifted to the sovereign wealth fund.
Four of these seven companies earned a net profit of Rs386 billion in the fiscal year 2022-23, according to the Ministry of Finance’s report, including Rs225 billion by OGDCL, Pakistan’s most profitable entity. The government wants to sell the shares of these companies to foreign nations without following the competitive bidding process defined under the Privatisation Ordinance. As of last year, these seven companies have a net worth of Rs2.3 trillion, which the government planned to use for raising funds through the sale of shares and using their earnings for capital investments.
