The Pakistani government will offer friendly nations the option to purchase the shares it sells to them
The Pakistani government will offer friendly nations the option to purchase the shares it sells to them
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ISLAMABAD: To help close a portion of the $4 billion funding gap estimated by the International Monetary Fund (IMF) for the current fiscal year, Pakistan will regulate the sale of shares of listed state-owned entities with a buyback. to amend the laws. Option for friendly countries on a government-to-government basis.

The announcement was made by Finance Minister Miftah Ismail on July 27 during a seminar on Corporate Governance of State-owned Enterprises (SOEs).

Pakistan's economy is going to suffer

The minister also said that the import ban would be lifted in a few weeks, all previous works agreed under the employee-level agreement with the IMF had been completed, and there was no longer any problem in receiving the first tranche. Late August.

The Finance Minister said that the existing privatization law does not allow such commercial transactions on a government-to-government (G2G) basis and a new law is needed. He did not specifically mention the Inter-Governmental Commercial Transactions Act 2022 that the federal cabinet approved later that day.

The cabinet approved the "Inter-Governmental Commercial Transactions Act 2022" submitted by the Ministry of Law and Justice, and referred it to the appropriate Standing Committee of Parliament, according to a statement issued by the cabinet after the meeting.

As per the information provided to the cabinet, this law will encourage foreign investment in G2G agreements and give more confidence to the investors.

The minister also discussed the previous agreements made with the IMF for the revival of its program and announced that the government would lift the import ban in a few weeks as it was causing problems for the public.

Challenge of IMF and economic faltering of Pakistan

 

According to Mr. Ismail, Pakistan has a recurring problem with SoEs as some of them are poorly managed, and even those that are critical to service delivery do not provide services, but rather cause budgetary issues. are made.

According to Mr. Ismail, most SoEs had professionals in charge, yet they were unable to perform, indicating that perhaps the rules and governance structures limit their ability to do so. According to the report, for such institutions to function, the country may need better governance and legal framework or faster methods of privatization. He claimed that over the years, even privatization has not progressed.

According to the minister, the National Accountability Bureau (NAB) and its decision-making and future order booking laws were a source of fear for ministers and officials in the previous administration, which is why there was a shortage of LNG in the country.

However, he added, "Such legislation also gave people an excuse not to act or take decisions, for which the country had to pay a heavy price." Although it has been 20 years since the NAB, he claimed that the level of corruption or public perception about corruption has not diminished.

The reason was that some people had an excuse to avoid working because these laws were straightforward. Since the federal government owns Balloki and Haveli Bahadur Shah, two LNG-based power projects, the minister said changes to the laws relating to SOEs should be done "appropriately to sell SOE shares to a friendly country through a stock exchange". Will go

Although the minister did not mention allies, Pakistan has strong ties with countries such as China and Saudi Arabia, which have provided significant aid to Islamabad during its financial difficulties. Mr Ismail denied the fact that some had begun to criticize the sale of "family silver", although negotiations for these transactions had not yet begun.

“We are offering only a small portion of each share traded on the stock exchange. We are only offering a small number of shares with a buyback option, and we do not hold any shares that are majority or owned are selling.

According to the report, "He said that the government can buy back those shares later if it chooses with better economic conditions." Due to a sharp decline in its foreign exchange reserves and increased servicing of its foreign debt, a cash-strapped Pakistan may face serious economic issues.

The inability of governments to control the massive imports of $80 billion during fiscal 2012 ended June 30 resulted in a significant current account deficit (CAD), which alone is enough to explain the economy's external weakness.

Despite record exports and remittances, the nation is unable to obtain dollars from the global debt market. With high inflation, dwindling foreign exchange reserves, rising current account deficit and currency depreciation, Pakistan has experienced increasing economic difficulties.

Pakistan needed financial assistance of $9 to 12 billion by June 2022 to prevent further depletion of foreign exchange reserves. rising current account deficit, which reached $13.2 billion in the first nine months, and the pressing need to repay external loans.

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