KARACHI: Pakistan’s finance minister Muhammad Aurangzeb on Monday urged commercial banks to help the government with its plans to privatize loss-making, state-owned enterprises (SOEs).

The minister’s comments came ahead of the visit of an International Monetary Fund (IMF) team to Islamabad to review Pakistan’s progress on a $7 billion bailout it secured in September last year. A successful review will see the Washington-based lender release around $1 billion tranche to cash-strapped Pakistan.

Under the program, Pakistan has undertaken several reforms in taxation, energy and others sectors as well as with regard to better management and privatization of loss-making SOEs. Pakistani provincial governments have also recently enacted laws to tax farm incomes in line with the lender’s requirements.

Prime Minister Shehbaz Sharif’s government seeks to sell its stake in state-owned companies, including the debt-ridden Pakistan International Airlines (PIA), as it aims to revive the $350 billion South Asian economy.

“You can be on the sell side, you can be on the buy side in conjunction with the foreign partners, but we’re very serious and we will pay you,” Finance Minister Aurangzeb said at a summit of commercial bankers in Karachi.

IMF bailouts are critical for Pakistan which narrowly avoided a sovereign default in June 2023 by clinching a last-gasp, $3 billion IMF loan and is currently navigating a tricky path to economic recovery.

The government’s first attempt to privatize the national airline failed in October when the single bidder, a real estate developer, offered a rate much lower than what was anticipated by authorities.

Aurangzeb said they had had “a bit of a hiccup,” but PIA was being relaunched.

“I talked about privatization. I would encourage all the banks to actually come in and help us,” he said.

Pakistan is also working on the outsourcing of Islamabad, Karachi and Lahore airports as well as privatization of power generation and distribution companies.

The South Asian country targets the single B credit rating this year to tap the Euro, US and Chinese bond markets, according to the finance minister. Islamabad plans to issue Chinese Panda bonds this year.

Aurangzeb said his team would engage with the credit rating agency Fitch during the forthcoming spring meetings in Washington.

“There’s a good opportunity that we get back into that so that we can access Euro, US dollar market,” he said.

But, Aurangzeb said, Pakistan would need to make its growth sustainable by increasing exports and productivity to break the recuring boom-and-bust cycle.

“It’s very easy, really easy to get into that trap again and say let’s go for it and that’s where we get into trouble, the imports go haywire, we run out of dollars, we get into a balance of payment problem and we go running back to the lender of the last resort [the IMF],” he said, stressing the need to fundamentally change the “DNA of Pakistan’s debt-ridden fragile economy.”