The International Monetary Fund (IMF) has given the government more things to do, like privatize public institutions that lose money and raise the prices of electricity and gas. Has previous privatization activity benefited underperforming institutions?
According to the sources, the IMF and Pakistan have concluded their technical negotiations. During the talks, the IMF asked Pakistan to raise its prices for electricity and gas, put an 18% value-added tax on oil, and privatize its public institutions that were losing money.
According to sources, the IMF has also demanded that state intervention in the economy be limited through privatization and routine audits of government institutions. In addition, the IMF has called for the eradication of corruption and bureaucracy, as well as the promotion of business and tax cultures. They have asked for LNG power plants, and the House Building Finance Corporation to be sold to private companies.
While trying to cut down on losses at PIA, steel mills, and other institutions, the IMF is said to have said that institutional flaws should be fixed for economic growth, investment, and job creation, and that public and private institutions should have the same opportunities and facilities. According to sources, Pakistan and the IMF will now engage in policy-level discussions.
Governments have privatized state-owned enterprises (SOEs) for decades to enhance their performance and reduce fiscal risk. The performance of SOE was frequently disappointing. Reforms for state-owned enterprises aimed to enhance their financial and operational performance and bolster their balance sheets. However, they rarely generated profits or dividends. It was decided to reduce the flow of public funds to SOEs, to separate commercial and noncommercial objectives, to obtain commercial financing, to strengthen oversight and monitoring, to improve SOE boards and management, and to minimize political interference. Some actions were successful, but the majority were not.