PIA PRIVATISATION: Finance Minister Muhammad Aurangzeb has expressed optimism regarding the completion of the privatization process for Pakistan International Airlines (PIA) by the “end of June or early July.” He made these remarks while addressing the Pakistan-Saudi Arabia Investment Forum in Islamabad on Monday.
Aurangzeb reiterated the government’s commitment to accelerate the privatization agenda, emphasizing that the government aims to divest itself from businesses where private sector involvement could lead to greater efficiency and productivity.
Highlighting the progress made in ongoing privatization efforts, including transactions involving PIA and Islamabad Airport, the Finance Minister conveyed hopes for concluding these transactions within the specified timeframe.
The privatization of PIA has attracted interest from various parties, including a business conglomerate based in Pakistan, indicating the potential for private sector engagement in revitalizing the national airline.
In line with the government’s privatization agenda, the Privatisation Commission (PC) recently extended the deadline for submitting the Statement of Qualification (SOQ) until May 18, 2024, following requests from interested parties.
COMPETITION COMMISSION APPROVES MERGER, PAVING THE WAY FOR PIA PRIVATIZATION
Over the weekend, the Competition Commission of Pakistan (CCP) issued a merger order, giving the green light to the acquisition of 100 percent shareholding of Pakistan International Airlines Corporation Limited (PIACL) by PIA Holding Company Limited (Holdco). This milestone clears the path for the long-awaited privatization of PIA, marking a significant step forward in the restructuring of the national airline.
Finance Minister Muhammad Aurangzeb, speaking at an event on Monday, revealed that an International Monetary Fund (IMF) mission is anticipated to visit Pakistan within the next seven to ten days. This visit is strategically timed as Pakistan approaches the end of its financial year, with the budget for fiscal year 2025, the first under the new government, slated for presentation before June 30th.
Highlighting Pakistan’s recent economic challenges and its close call with default last summer, Aurangzeb underscored the significance of the country’s engagement with the IMF. Pakistan’s $3-billion Stand-By Arrangement (SBA) with the IMF has been instrumental in stabilizing its economy, with the disbursement of the final tranche of $1.1 billion occurring last month.
Moreover, Aurangzeb revealed that Pakistan has expressed its intention to enter into a larger and longer-term program with the IMF, a request to which the IMF has acceded. Discussions on the new program are expected to commence with the arrival of the IMF mission in Pakistan in the coming days.
PAKISTAN PURSUES MACROECONOMIC STABILITY AND STRUCTURAL REFORMS, FOCUSES ON INVESTMENT AND GROWTH
Finance Minister Aurangzeb outlined Islamabad’s objectives during recent engagements, emphasizing the government’s pursuit of macroeconomic stability and structural reforms to foster sustainable growth.
One key aspect highlighted by Aurangzeb is the imperative need to increase Pakistan’s tax-to-GDP ratio from the current 9% to a target range of 14-15%. This move is crucial for enhancing revenue generation and strengthening fiscal sustainability.
Addressing the complex energy equation was also underscored as a priority, with Aurangzeb emphasizing the importance of transitioning towards competitive energy sources to drive economic competitiveness and growth.
Furthermore, state-owned enterprise (SOE) reform emerged as another critical area of focus, reflecting the government’s commitment to enhancing efficiency and productivity within the public sector.
Aurangzeb also extended a warm welcome to the Saudi business delegation visiting Pakistan, expressing the government’s dedication to facilitating the private sector and attracting foreign direct investment (FDI) to propel export-led growth. The focus on investment underscores Pakistan’s commitment to leveraging external partnerships to stimulate economic development and job creation.
Providing an overview of Pakistan’s economic landscape, Aurangzeb highlighted positive indicators, including robust agricultural GDP growth driven by bumper crops such as sugarcane, rice, and wheat. Additionally, he expressed confidence in achieving a current account deficit of less than a billion dollars for the fiscal year, signaling improved external balance.
Furthermore, Aurangzeb highlighted the recovery of foreign exchange reserves to over $9 billion, equivalent to approximately two months of import cover, reflecting improved external liquidity and stability. He also noted the stability of Pakistan’s currency over the past ten months and the decline in inflation from its peak to approximately 17%.
Aurangzeb also pointed out the resurgence of foreign buying and institutional investment in Pakistan’s stock market, underscoring growing investor confidence and interest in the country’s economic prospects.
Overall, Aurangzeb’s remarks underscore Pakistan’s commitment to fostering an enabling environment for investment, implementing necessary reforms, and steering the economy towards sustainable growth and stability.
