The IMF opposes the delay of the new evaluation report of state-owned enterprises

• Pakistan had agreed that the CMU would issue the first periodic report in December.
• The IMF has been informed that the CMU was created in September 2022.
• The Representative assures that the report will be completed by the end of December.

ISLAMABAD: The International Monetary Fund (IMF) has objected to the delay in updating the assessment of state-owned enterprises (SOEs) and launching the report by the end of December under the $3 billion structural benchmark of the reserve arrangement program ( SBA).

When this scribe contacted Finance Ministry spokesman Qamar Abbasi to inquire about the launch of the SOE report under the IMF deal, he replied that it would be completed by the end of December 2023.

The IMF had set a structural benchmark under the $3 billion SBA program, while it was agreed that the Central Monitoring Unit (CMU) would issue its first periodic report on the performance of state-owned enterprises, using the latest available data, to the federal government by December- end.

The Ministry of Finance informed the IMF that the CMU was created in September 2022 to improve the monitoring and supervision functions of SOEs and to provide better analysis at the aggregate level of SOEs.

The full operation of the CMU will be completed by the recruitment of the required staff and the publication of its first periodic report on the performance of the entities in accordance with Article 31(3) of the new State Enterprises Act, using the latest available data.

IMF staff highlighted the enactment of the new SOE law in early 2023 and called for rapid progress, with ADB’s support, on: (i) development of new political ownership; (ii) amending several laws concerning state-owned enterprises (end-November 2023 SB, 12); (iii) promoting the delayed full operation of a CMU within the Ministry of Finance (end-November 2023 SB, 12); (iv) gradual reduction of the footprint of the State (based on the March 2021 SOE Triage and including the divestment of two LNG power plants, a development finance institution and a small public bank); and (v) continuing regular and timely audits of key SOEs.

It called for improving governance by (i) operating the recently passed SOE Act into a policy that clarifies ownership arrangements and allocation of roles within federal governments; and (ii) amending the Acts of four selected SOEs to make the new state-owned enterprises law fully applicable by the end of November.

The Treasury spokesman said: “We are committed to improving the governance, transparency and efficiency of state-owned enterprises as well as limiting their fiscal risks. In addition to the operation of the CMU within the MOF (7) which will improve the Government’s monitoring of SOEs, specific actions include our new SOE legislation which came into force in December 2022 and, among others: (i) ensure that SOE activities are commercial, including defining what constitutes a commercial SOE; and (ii) strengthen oversight and ownership arrangements. We are now working with the support of ADB to complete further regulatory reforms, including (end of November 2023 SB): (i) operationalizing the newly approved State Enterprise Law into a policy that clarifies ownership arrangements and allocation of roles within the federal government. and (ii) amending the Acts of four selected SOEs to make the new SOE legally applicable to those SOEs.

“We are currently targeting the National Highways Authority, Pakistan Post, Pakistan National Shipping Company and Pakistan Broadcasting Corporation.

“SOEs are continuously audited by external auditors and their audit reports are usually published, while the Auditor-General conducts the ‘compliance with principle’ audit of SOE accounts. In addition, we have requested our Auditor General to conduct special audits of several SOEs (ie, SSGCL, HESCO and PESCO) due to their size and importance in their respective sectors. The respective relevant ministries are currently in the process of defining the scope and terms of reference in consultation with all stakeholders and plan to secure the necessary approvals to entrust the audit by the end of the 23rd year,” the spokesperson added.

Originally published on The news