Selling SOE Shares.

Finance Minister Miftah Ismail has announced that the government will be amending laws to allow for the sale of shares of listed state-owned entities (SOEs) with a buyback option to friendly countries on a government-to-government (G2G) basis. This will essentially help bridge a part of the $4 billion financing gap that has been estimated by the IMF for the current fiscal year. To make this possible, the federal cabinet has approved the Inter-Government Commercial Transaction Act 2022 because the existing privatisation law did not allow for such commercial transactions on a G2G basis.

This is an innovative approach to deal with the ongoing crisis, but it has understandably raised questions regarding the contours of such an agreement. FM Ismail is convinced that the introduction of this law will give confidence to foreign investors and also increase foreign investment on a G2G basis in developmental agreements. Additionally, this is also the first time that practical steps are being taken to safeguard G2G agreements and make them transparent.

Of course, there has been a persistent issue with the performance of SOEs that have been burning a hole through our budget and this is an idea that could help generate some revenue. The priority should perhaps be to focus on loss-making entities such as PIA and power distribution companies that have not been performing that well.

However, this idea has received criticism and has also been politicised...