Pakistan sees growth above 4%, looks to raise more than US$1 billion from privatisation

Pakistan plans to transfer several state-run businesses or services to private ownership or management. The government has about a dozen entities in its pipeline and expects five or six to proceed this fiscal year. This matters because privatisation could bring money into a cash-strapped economy and reduce the state’s role in running commercial operations.

The candidates include state-owned power distribution companies and airport operations that could be outsourced. Pakistan already privatised its flag carrier, Pakistan International Airlines, last year. Selling an entity can produce an upfront payment, while outsourcing can bring fees or investment under a private operator. The exact amount from each transaction will depend on the terms and value of the entity.

Finance Minister Muhammad Aurangzeb said the selected transactions could raise more than US$1 billion. The programme is also a reform test linked to Pakistan’s IMF commitments. Moving ahead could support public finances and show that the government intends to let the private sector lead, but the article gives no detailed timetable or transaction-by-transaction valuation.

Privatisation is the transfer of a government-owned company or service to private owners or operators. It can involve selling an asset outright or outsourcing its operation. Governments may pursue it to raise money, reduce losses, attract private investment, or improve management. In Pakistan’s case, it matters because the state is trying to strengthen a cash-strapped economy and reduce pressure from loss-making firms.

The article gives two examples: state-owned power distribution companies and airport operations. A sale can generate an upfront payment for the government. Outsourcing can place daily operations with a private company, while the state receives a fee or keeps a supervisory role. Private operators then take greater responsibility for running the service, subject to the agreed arrangement.

Pakistan has around a dozen entities in its pipeline and expects five or six to proceed this fiscal year. Aurangzeb said the government wants the private sector to lead the country. The article presents privatisation as both a fundraising tool and evidence of reform credibility, but it does not describe specific sale terms.

The expected improvement is a growth rate above 4 per cent during Pakistan’s current fiscal year. That forecast signals recovery after a period of severe economic turmoil, including damage worsened by the COVID-19 pandemic. It also comes while oil prices remain elevated, creating added pressure for an economy dependent on imported energy.

The separate financial target concerns privatisation. The government has about a dozen entities in its pipeline, including power distribution companies and airport operations. Finance Minister Muhammad Aurangzeb expects five or six to go through during this fiscal year. Together, those transactions could raise upwards of US$1 billion. Money could come from selling state assets or arranging private operation of public services.

The figures are expectations, not guaranteed results. Pakistan has secured support through a US$7 billion, 37-month IMF loan programme signed in 2024. It also reached a staff-level IMF agreement potentially unlocking about US$1.21 billion. Growth above 4 per cent and successful privatisations would strengthen the recovery story, while inflation and external financing remain important risks.

Loss-making state companies can require continuing public support, putting pressure on government finances. Selling them or outsourcing their operations could reduce that burden. A sale may also provide immediate revenue. The broader goal is to move commercial responsibility away from the state and toward private operators, although the article does not quantify the losses or savings involved.

Pakistan’s pipeline includes state-owned power distribution companies and airport operations. The government expects five or six transactions to proceed this fiscal year, potentially raising more than US$1 billion. That money could help a cash-strapped economy. Outsourcing may also shift operating responsibility to private businesses, while a sale can end the government’s direct ownership of an entity.

The article describes privatisation as a key test of reform credibility with the IMF. Officials have warned that failure to offload loss-making state firms risks renewed pressure on public finances. Successful deals could therefore provide both cash and evidence of reform. However, the article does not promise that every transaction will be completed or eliminate all fiscal pressure.

The IMF considers privatisation important because it tests Pakistan’s ability to implement difficult economic reforms. The country’s recovery is supported by a US$7 billion, 37-month IMF loan programme signed in 2024. That programme includes tough measures, such as raising tax revenue on farm income. Privatisation adds another practical test of the government’s commitments.

Pakistan has around a dozen entities in its pipeline. These include state-owned power distribution companies and the outsourcing of airport operations. Finance Minister Muhammad Aurangzeb expects five or six to proceed this fiscal year, raising more than US$1 billion. The mechanism is direct: transactions can provide revenue, while transferring operations may reduce the state’s exposure to loss-making businesses.

Officials have underlined that failing to offload loss-making state firms risks renewed pressure on public finances. Completing deals would therefore demonstrate that reforms are moving beyond announcements. It could also support the government’s stated aim of having the private sector lead. The article does not say that the IMF has set a single deadline for these transactions.

Pakistan is vulnerable because important parts of its economy are tied to the Gulf and the wider Middle East. It imports energy from the Gulf, receives remittances from the region and relies on financing support. A prolonged conflict could make energy more expensive or disrupt financial flows. Higher oil prices would also increase the cost of buying fuel abroad.

The article says Pakistan has so far procured adequate quantities of fuel and avoided shortages. Agriculture, a critical sector, was also holding up. Even so, the government is watching inflation closely because commodity prices can have knock-on effects. The country still relies on external financing to strengthen foreign-exchange reserves and meet debt repayments.

This combination creates several channels of risk. More expensive imports can worsen inflation and put pressure on foreign currency. Weaker remittances or regional financing could make it harder to support reserves and repay debt. Aurangzeb said growth should remain above 4 per cent, but the outlook depends partly on how long the conflict and its economic effects continue.

Foreign-exchange reserves are a country’s holdings of foreign currencies and other assets that can be used for international payments. They give a government and central bank a pool of external funds. In Pakistan’s case, reserves matter because the country must pay for imported fuel and other goods, while also meeting repayments on foreign debt.

The article says Pakistan remains reliant on external financing to bolster its reserves and meet debt repayments. Gulf energy imports are especially important because the country needs foreign currency to purchase fuel abroad. If oil prices rise, the same imports can require more foreign currency. External financing can therefore help bridge the gap between international payments and available reserves.

Pakistan is discussing several sources of support. It reached a staff-level IMF agreement potentially unlocking about US$1.21 billion under the Extended Fund Facility and a climate programme. It is also discussing a proposed US$10 billion exchange stabilisation facility with the United States. Aurangzeb said Pakistan could still access markets if that facility does not come through.