Pakistan FinMin Emphasizes Privatization

Finance Minister Muhammad Aurangzeb Sunday highlighted the relevance of the necessity to proceed toward privatization, relating it to the country’s economic stability

During the Pre-Budget Conference 2024-25 in Lahore, the finance minister stated, “You have to move towards privatization if you want economic stability in the country.”

Aurangzeb’s words come as the federal government pushes for the privatization of many state-owned firms (SOEs) to reduce the load on the exchequer and address the current financial crisis caused by various catastrophic economic situations.

The finance czar emphasized that the private sector has been brought on board with the government, citing improving economic indicators such as a reduced current account deficit (CAD) of less than $1 billion, a drop in inflation, and “all-time high” stock exchange levels.

Revealing that about Rs8 to 10 trillion in cash is now in circulation in Pakistan, the finance minister emphasized the importance of working on tax and GDP concerns and urged business people to enter the tax net on their own if they haven’t already.

The minister assured that the government would provide all types of facilities and emphasized that the authorities would not back down on the issue of widening the tax net.

“People think that if they come into the tax net, they will be harassed for no reason; [however, that’s not the case, as] we will provide facilities, negotiate but will not go back to the track,” he stated.

It is important to note that, to combat tax evasion, the federal government has already ordered the barring of SIM cards for non-filers who do not appear on the current taxpayer list yet are required to file an Income Tax Return for Tax Year 2023.

Lamenting the failure and non-implementation of the track and trace system, Aurangzeb reaffirmed his commitment to uniform energy pricing for industries, describing it as a “just” demand.

“The industries cannot function at 25 to 26% interest rate,” he stated.

The minister emphasized the need to eliminate power theft, stating that the government is implementing essential reforms to the boards of distribution companies (Discos) and that the private sector would be involved in this effort.

The government’s campaign for privatisation

The federal government’s Cabinet Committee on Privatisation (CCOP) certified up to 24 SOEs “fit for privatization” the day before while also seeking ideas for the denationalization of even profitable firms — but the forum emphasized that the focus will remain on loss-making SOEs.

Geo News obtained a list of SOEs recommended for privatization, which includes Pakistan International Airlines (PIA), First Women Bank Limited, House Building Finance Company Limited (HBFC), Zarai Taraqiati Bank Limited, Utility Stores Corporation (USC), Pakistan Engineering Company Limited (Peco), State Life Insurance Co Limited, Sindh Engineering Limited (Sel), and Pakistan Re-Insurance Co Limited.

In addition, the list included government-owned power distribution companies such as Lahore Electric Supply Company Limited (Lesco), Islamabad Electric Supply Company Limited (Iesco), Multan Electric Power Company Limited (Mepco), Gujranwala Electric Power Company Limited (Gepco), Hyderabad Electric Supply Company Limited (Hesco), Peshawar Electric Supply Company Limited (Pesco), Sukkur Electric Power Company (Sepco), and other enterprises.