IMF tranche tied to SOE reforms

Express Tribune reported that the International Monetary Fund has proposed amending state-owned enterprise laws as a prior action before it approves the next $1 billion tranche. The suggestion came as review discussions, held from September 23 to October 7, drew to a close, and the IMF has not yet issued a press statement on the outcome. Under this sequence, a staff-level agreement would lead to a board meeting only after parliament passes the changes.

The Senate Standing Committee on Finance, led by Senator Saleem Mandviwalla, will examine the laws and pass them if they serve the national interest. The government has missed every earlier deadline for these changes, which the lender is pushing so that SOEs follow global governance norms. Separately, the Finance Ministry said SOE debt, not counting contingent liabilities, hit Rs10.1 trillion by December last year, the highest level so far.

The IMF has asked Pakistan to bring the SOE laws into line with the main SOE Act by mid-November, while the board could meet in late November under the Extended Fund Facility. Finance Secretary Imdad Ullah Bosal told a National Assembly panel that seven bodies, including the National Bank of Pakistan, would have their laws amended. The IMF has so far disbursed $4.2 billion from the $7 billion package.