EconomyPakistan

Is Privatisation Strategy the Key to Economic Stability in Pakistan?

In the wake of economic challenges, Pakistan stands at a pivotal juncture where the newly elected coalition government, led by Prime Minister Shehbaz Sharif, faces the daunting task of steering the country towards financial stability. Under the immense pressure of the International Monetary Fund (IMF) to secure a bailout package exceeding $6 billion, the government has renewed its commitment to privatising several public-sector entities.

The privatisation list prioritises entities such as Pakistan International Airlines (PIA) and Power Distribution Companies (Discos), focusing initially on loss-making SOEs. The strategy outlines a phased approach: the first phase within one year, the second phase spanning one to three years, and the third phase extending from three to five years.

The philosophy behind privatisation is rooted in the belief that the state should focus on establishing regulations, while the ownership and operation of industries, services, and utilities should be left to the private sector. Proponents argue that privatisation leads to efficiency gains, cost savings, and improved service delivery. However, the history of privatisation in Pakistan paints a complex picture, with wealthy investors often reaping benefits while workers and ordinary citizens face significant challenges.

Workers have to deal with layoffs, low wages, and no legal protection against various forms of exploitation. To understand the detrimental impacts of privatisation, one can look at privatised banks and corporations and see who truly benefits from this policy.

The government’s unwavering commitment to PIA’s revival was palpable throughout the meeting, with senior government officials actively participating to ensure stringent measures were in place for the airline’s improvement. Following the completion of the International Aviation Safety Assessment (IASA) audit, the PIA unveiled plans to commence operations in Europe and Britain from June 2024, demonstrating its commitment to global expansion and service excellence.

The privatisation of electricity distribution companies is also on the agenda, with the government aiming to reduce losses, improve efficiency, and attract investment. The privatisation process for power distribution companies will be completed in four years, requiring restructuring before the privatisation process can begin.

The IMF has set tough preconditions like hiking electricity tariffs and imposing a levy on petroleum products to revive the stalled USD 6 billion bailout package to Pakistan. This commitment includes potential privatisation of power distribution companies (DISCOs) under concession agreements, marking a significant policy shift by the Pakistan Muslim League-Nawaz (PML-N) government.

The debate on privatisation is not just an economic one but also a social and political discourse. It touches upon the very fabric of the welfare state and the role of the government in providing essential services to its people. As Pakistan navigates through these challenging times, the outcomes of these privatisation efforts will significantly impact the nation’s economic trajectory and the well-being of its citizens.

All things considered, while privatisation may offer a pathway to economic reform, it is imperative to weigh the long-term implications on the workforce and the broader society. The government must ensure that the transition to private ownership does not come at the expense of the vulnerable segments of the population. As Pakistan moves forward with its privatisation agenda, it is crucial to foster a balanced approach that promotes efficiency and growth while safeguarding the rights and livelihoods of its people.

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