Govt plans selling shares of profitable state-run enterprises to generate over $1bn
Business
Seven entities from petroleum, power and services sectors are on the list
ISLAMABAD (Dunya News/Web Desk) – The government is mulling over selling the shares of profitable state-owned enterprises (SOEs) – a move that is expected to generate over $1 billion for the cash-starved country.
Sources in the finance ministry say the plan envisages offering the shares seven top state-run entities in global market with the likes of Oil & Gas Development Company Limited (OGDCL) and Pakistan Petroleum Limited (PPL) on the proposed list, as .
The suggestion comes as the International Monetary Fund (IMF) has been pressing Islamabad hard to go for privatisation of lossmaking SOEs, responsible for burdening the national exchequer and thus widening fiscal deficit at a time when Pakistan is facing the worst economic crisis in its history.
With inflation and interest rates reaching to record-high levels, the rising costs of living means people have nothing or very little to spend to boost domestic demand, as shrinking purchasing power has made the lives of an overwhelming majority miserable.
At the same time, the cost of doing business is so high that it has become impossible for businesses to expand or establish new units, thus resulting in stagnant wages and scarce job opportunities.
The sources say the caretaker government is targeting the profit-making petroleum, power and services sectors for the purpose and will take the IMF into confidence before executing the plan.
Meanwhile, it is expected the shares would be offered to global buyers very soon before the end of caretaker setup after the formation of new elected government as a result of February 8 elections.
THE IMPACTS
The Pakistan Stock Exchange will certainly love the move that will not only increase the market capitalisation but also share prices – a development that will affect both the SOEs under consideration and other companies registered at the market.
KSE-100 Index, the benchmark at the Pakistan Stock Exchange, has currently reached 64,347.71 with a 427.87 points, or 0.67 per cent, gain during intraday trading by 11:49am PST on Thursday.
Any confirmation of the plan or its execution will give a new boost to investors who have already propelled share market to the new highs during the past months amid the political uncertainty related to the general elections.
It will also set the direction for the market and investors who feel confident of the policies to come under the elected government which too would appreciate the much-needed foreign reserves inflow.
At the same time, the cash inflow is also going to strengthen rupee and minimise the possibility any weakening of local currency due devaluation.
However, reduction in prices of different items due to cheaper imports can only be ensured if the government is able to perform its regulatory from the national to the local levels, as the people want immediate relief amid unbearable inflation.
