ISLAMABAD: The International Monetary Fund (IMF) has urged Pakistan to accelerate the privatization of state-owned enterprises (SOEs) as a critical component of ongoing negotiations for the country’s 2025–26 federal budget, ARY News reported citing official sources.
As part of the $7 billion loan program, the IMF is emphasizing structural reforms, particularly privatization and rightsizing of underperforming public entities, to reduce the fiscal burden and attract private investment. The talks are currently in their final phase.
According to sources, Pakistan has committed to completing the rightsizing of state institutions by December 2025. A key focus is the privatization of Pakistan International Airlines (PIA). The government has reportedly addressed major hurdles, including tax liabilities and negative equity, making the airline more appealing to investors. The privatization process for PIA is expected to be concluded within the current year.
The recent lifting of the European Union’s ban on PIA flights has added momentum to the effort. Additionally, Pakistan has appointed financial advisors to oversee the privatization of several electricity distribution companies (DISCOs). The first phase will include the privatization of companies in Islamabad, Faisalabad, and Gujranwala by December 2025, followed by Hyderabad, Sukkur, and Peshawar in the second phase.
The Nandipur Power Plant is scheduled for privatization in January 2026, while transaction structuring continues for the sale of the Roosevelt Hotel in New York, owned by PIA. Progress is also underway in the privatization of First Women Bank and the House Building Finance Corporation (HBFC).
Meanwhile, Prime Minister Shehbaz Sharif is lobbying the IMF to allow a Rs250 billion reduction in the Federal Board of Revenue’s (FBR) tax collection target for FY2025–26. The FBR has formally requested to lower its target from Rs14,307 billion to Rs14,057 billion, citing sluggish economic growth and a declining inflation rate as reasons to avoid overburdening the economy with new taxes.
