The Pakistani government failed to amend the Pakistan Sovereign Wealth Fund Act by the December deadline, a key condition set by the International Monetary Fund (IMF) to enhance transparency in governance and fiscal affairs.
The Finance Ministry had committed in writing to revising the Act by December 2024. However, disputes over the amendment process between the IMF and the ministry have stalled these legal changes. Qumar Abbasi, a spokesperson for the Ministry of Finance, confirmed that the amendment deadline was not met, although significant progress has been made in drafting the legislation.
Challenges in Amending the Pakistan Sovereign Wealth Fund Act
Despite the ministry’s view that changes to the governance structure could be addressed through rules rather than amendments, the IMF has insisted on adhering to the initial commitments. These discussions arise amid the broader context of the Pakistan Democratic Movement (PDM) government’s enactment of the Sovereign Wealth Fund Act in 2023, facilitating the transfer and eventual sale of shares from profitable entities to international markets.
In his communication with the IMF, Finance Minister Muhammad Aurangzeb emphasized the government’s goals to implement comprehensive governance frameworks across state-owned enterprises (SOEs), enhance the governance of the Sovereign Wealth Fund, and advance other governance and anti-corruption reforms.
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The IMF staff has stressed the importance of maintaining high governance standards to ensure fair investment practices. The planned amendments aim to reposition SOEs under traditional governance structures and ensure the Sovereign Wealth Fund operates with appropriate safeguards.
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Further stipulations from the IMF include prohibiting the State Bank of Pakistan from lending to the fund and restricting the fund from providing loans to government entities. The amendments would also require that the fund engage in international competitive bidding to sell its entities, cease negotiated sales and surrender all revenues to the national treasury.
Although the government initially agreed to these changes, sources now indicate a preference for implementing them through regulatory rules rather than binding legislation. The proposed amendments will notably strip the fund of its current privileges in public-private partnerships and privatization processes, aligning its operations more closely with government oversight and fiscal discipline.
