IMF demands Reducing Fiscal Gap, Sale of PSEs from Caretaker Govt

September 7, 2023

The IMF has demanded the implementation of its program conditions from the Pakistani government, including reducing expenses, downsizing government departments, and transferring 203 state-owned companies from ministries to the control of the Ministry of Finance under the $3 billion Stand-By Arrangement.

According to sources at Express News, the IMF has called for cost-cutting and expediting the downsizing of government departments. As part of the current fiscal year, 203 state-owned companies are to be placed under the administrative control of the Ministry of Finance. The IMF’s position is that having these companies under ministries hampers efficiency. The power sector has experienced losses due to governance issues in JENCOs and DISCOs, and the Petroleum Division is facing significant losses from benefiting companies in the oil and gas sector.

The Ministry of Finance has also revealed that the IMF is seeking similar downsizing measures in other sectors during the current fiscal year, including PIA, Steel Mills, RLNG power plants, and DISCOs.

Additionally, during a cabinet committee meeting chaired by Finance Minister Shaukat Tarin, it was decided to form a technical committee to address hurdles in the privatization and regulation of PIA and to collaborate with the NAB for a detailed action plan with a clear timeline.

Furthermore, it was announced during the meeting that a committee has been formed to present a workable plan for the inclusion of the private sector in the administrative setup of DISCOs, with Energy Minister’s leadership. The committee includes the Secretary of the Regulation Commission, Special Secretary of Finance, and members from NEPRA.

In summary, the IMF has laid out conditions for the Pakistani government to reduce expenses, streamline government departments, and transfer state-owned companies to the Ministry of Finance’s oversight. These measures aim to improve efficiency and address losses in various sectors, including the power and petroleum industries. Additionally, committees have been formed to facilitate these changes and develop action plans.