IMF strict conditions: major restrictions on Sovereign Wealth Fund, agreement on transparent privatization process

Islamabad (Commerce Desk) Significant developments have emerged between Pakistan and the International Monetary Fund (IMF) regarding the Sovereign Wealth Fund, under which the government has assured limitations on the fund’s powers. According to sources, Pakistan has informed the IMF that the Sovereign Wealth Fund will not have the authority to directly sell state-owned institutions, take loans, or retain its own revenues. The government has also maintained that the fund will not become operational until the required legislative amendments are approved by Parliament. According to sources in the Ministry of Finance, the proposed amendments could not be presented in Parliament on time, on which the IMF has stated that without legal reforms the activation of the fund is not possible. Under the new proposed changes, the fund will be given the status of a holding company, limited only to managing government entities and improving their performance. As per the agreement, the fund will not be allowed to directly sell any state assets, while the privatization process will be completed in a transparent and competitive manner in accordance with international standards. It has also been agreed that the fund’s income will be transferred to the government and it will not have the authority to borrow or provide financial guarantees. The government has further assured that appointments in the fund’s leadership and advisory structure will be made on the basis of merit and transparency. On the other hand, the privatization process remains slow, with limited progress seen in entities such as PIA, while private sector involvement in some power distribution companies is also facing delays.