ADB approves $300m to reform PSEs in Pakistan

The Asian Development Bank (ADB) signed a $300 million loan agreement on Thursday to support Pakistan’s efforts to implement major structural reforms and efficiency initiatives to improve the performance, transparency, and financial sustainability of the country’s federal government-run public sector enterprises (PSEs).

Finances of PSEs in Pakistan remain weak despite recent reform initiatives. The 183 PSEs owned by the government comprise 169 companies, seven development finance institutions, and seven federal authorities, employing more than 402,543 workers with the total assets of Rs10,823 billion ($108 billion) in the fiscal year FY 2015.

In that year, 172 PSE’s (94 percent) disclosed financial statements, of which 53 PSEs, or 31 percent reported losses despite significant budget transfers. 

ADB Country Director for Pakistan, Xiaohong Yang and Secretary Economic Affairs Division, Tariq Mahmood Pasha signed the loan agreement on behalf of their respective sides.

The new ADB assistance is for the second sub programme under the PSEs reform programme, bringing total ADB financing for critical reforms in PSEs to $600m since June 2016. Last June, ADB had approved $300m to help Pakistan roll out major structural reforms to improve the performance and financial sustainability of its public sector enterprises.

The government has earmarked Rs15 billion in the federal budget for 2017/18 to operationalise these funds. This will facilitate to make this critical reform effective.