IMF Tells Pakistan to Fix SOE Laws or Face Loan Delays

Pakistan will have to move faster on changes to state owned enterprise laws as the International Monetary Fund has triggered concern over repeated delays and asked the administration to complete the pending amendments before the Fund's next Executive Board gathering.

Key points

• If Pakistan completes the review successfully, the IMF Executive Board could consider the case in November for a $1 billion disbursement under the Extended Fund Facility.
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• The Fund is additionally pressing Pakistan to change the process for appointing the chairman of the National Accountability Bureau.
• The IMF has now given Pakistan another deadline of mid November to bring the remaining SOE laws in line with the main State Owned Enterprises Act.
• The IMF has additionally flagged delays in changes to the Sovereign Wealth Fund Act.

Notably, the matter has become one of the sticking points in the ongoing fourth review of Pakistan's IMF program. Pakistani authorities informed the Fund that work was continuing on a number of laws, but the administration has already missed multiple deadlines set during previous reviews.

For context, the IMF has now given Pakistan another deadline of mid November to bring the remaining SOE laws in line with the main State Owned Enterprises Act. The administration had previously committed to completing the work by August 2026. Govt Launches Action Plan to Expand Retail Bond Participation.

In practice, the legislation covers a number of major public sector organizations. Amendments have been proposed for the laws governing Port Qasim Authority, Gwadar Port Authority, Karachi Port Trust, State Life Insurance Corporation, National Telecommunication Corporation and Pakistan Railways. While amendments to the others are still moving through the approval process, three of the nine laws identified under the reform have already been passed.

Wapda is among the problems receiving particular attention from the IMF. During an earlier review, Pakistan had sought an exemption for Wapda since of its strategic and essential role. The administration had instead committed to improving its governance and financial structure, but office-holders were unable to report significant progress during the latest discussions.

Meanwhile, the Fund is additionally pressing Pakistan to change the process for appointing the chairman of the National Accountability Bureau. Under the IMF program, amendments to the National Accountability Ordinance are due to be submitted to Parliament by January 2027, with the aim of making the appointment process more transparent and rules based. IMF Wants More Tax on Farmers.

Another part of the review involves corruption risks at public sector organizations. NAB is developing a methodology to assess such risks and has selected 10 entities from a list of 30 considered to be at high risk. Pakistan is required to complete the methodology by the end of October so NAB can employ it to prepare measures for reducing corruption risks.

Notably, the IMF has additionally flagged delays in changes to the Sovereign Wealth Fund Act. The proposed amendments would clarify that firms owned by the fund remain subject to the SOE Act and SOE Policy and would establish further rules for the fund's role as an owner.

Meanwhile, the proposed changes would additionally alter how dividends from businesses owned by the Sovereign Wealth Fund are handled. Instead of retaining 50 percent of the dividends under the existing framework, the income would first go to the administration. It would then decide how it should be distributed.

If Pakistan completes the review successfully, the IMF Executive Board could consider the case in November for a $1 billion disbursement under the Extended Fund Facility. The Fund has already published $4.2 billion of Pakistan's $7 billion EFF program. Stay Connected with ProPakistani.

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For now, IMF Tells Pakistan to Fix SOE Laws or Face Loan Delays remains the part of the story worth watching, and further updates are likely as more details are confirmed.