ISLAMABAD: 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).
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.
“Pakistan’s state-owned enterprises provide vital services to the people of Pakistan and to the country’s economy,” said Ms Yang. “ADB is proud to support the government of Pakistan’s commitment to implement reforms that will ensure financially sustainability of these firms while improving efficiency and cost-effectiveness,” she said.
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 federal government owns 191 public sector enterprises employing around 420,000 workers. The financial performance of many PSEs has been weak in recent years despite budget support from the federal government.
A fiscal consolidation drive to improve federal finances has constrained the federal government from carrying out important reforms related to the public sector enterprises, including a reduction in contingent liabilities from pensions and other related costs.
The programme will support government’s efforts to improve the performance of the PSEs by improving corporate governance and accountability, identifying and reducing financial burdens arising out of direct budgetary transfers to PSEs. This will strengthen fiscal sustainability and freeing of finances for priority development projects.
With ADB’s assistance, under the Public Sector Enterprises Reform Programme, the government has carried out significant structural reforms and efficiency initiatives to help improve financial sustainability and operational efficiency of PSEs, and helped improve the compliance to the Corporate Governance Rules 2013.