The Asian Development Bank will provide $20 million in loans to help Pakistan improve corporate governance, technical capacity and regulatory framework of the country’s privatization program, the bank said on Tuesday.
”The project will finance management, and financial consulting services to develop the capacity of Ministry of Finance to monitor the public sector enterprise portfolio, assess fiscal liabilities, identify and track potential issues, and oversee corporate restructuring of selected public sector enterprises,” said ADB’s country director for Pakistan Werner E. Liepach, who signed the loan agreement with Mohammad Saleem Sethi, secretary Economic Affairs Division.
“It will also strengthen the process by improving the corporate governance and management capacity of selected PSE, and strengthening governance and regulations in selected sectors dominated by public sector enterprises.”
Public sector enterprises accounts for about 10 percent of the country’s gross domestic product and thus comprise a major share of the economy.
“Weak corporate governance and management issues have been resulting in their poor service delivery and bleeding of country’s scarce financial resources with tax payers ultimately bearing the brunt of these inefficiencies,” Manila-based bank said.
The ADB said the project seeks improvement of the governance and regulatory regime to ensure that efficiency gains in public sector enterprises are in line with interest of the general public and consumers.
“The assistance will help improve financial control and reporting through improved inter-agency coordination and online monitoring system at the Security and Exchange Commission of Pakistan (SECP),” it added.
The loan will also assist the state-run Privatization Commission in preparing a privatization strategy and monitor the future transactions.
Pakistan plans to sell at least 68 public sector firms, with the aim to raise $5 billion in the next two years. However late last year the privatization commission got a setback when it scrapped a 10 percent planned sale of shares in the country’s biggest oil exploration firm – Oil and Gas Development Company Ltd – following lukewarm response from the local and foreign buyers.
The commission will now offer 40 percent government’s stake in Habib Bank Ltd, which will be sold in March 2015 for around $1.2 billion. But, the country’s privatisation programme, already cut back many a times, has been slowed down.
“The expected impact would be reduced fiscal and economic costs through improved management and governance of Pakistan’s public sector enterprises,” Liepach added.