ISLAMABAD, Pakistan: Pakistan and the Asian Development Bank (ADB) on Thursday signed a $300 million loan 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 Eector Enterprises (PSEs).
The ADB’s Country Director for Pakistan Xiaohong Yang and Secretary Economic Affairs Division (EAD) Tariq Mahmood Pasha signed the loan agreement in Islamabad.
“Pakistan’s state-owned enterprises provide vital services to the people of Pakistan and to the country’s economy,” ADB’s Country Director for Pakistan Xiaohong Yang said.
Yang said ADB was proud to support the government of Pakistan’s commitment to implement reforms that would ensure financially sustainability of these firms while improving efficiency and cost-effectiveness.
The financial performance of many federal government PSEs in Pakistan – which employ more than 400,000 people have been weak in recent years, despite significant budget support from the federal government.
The program 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.
ADB’s assistance is the second sub-program under the PSEs Reform Program, bringing total ADB financing for critical reforms in PSEs to $600 million since June 2016.
With ADB’s assistance, under the Public Sector Enterprises Reform Program, the government of Pakistan 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.
Many policy actions have been introduced under the program to improve the financial transparency, monitoring, and corporate governance in PSEs. A critical target under the program’s second sub-program is to increase the compliance rate of companies to Corporate Governance Rules to 50%.
The restructuring and reform of selected public sector enterprises, particularly Pakistan Railways, have also been initiated.
Under this program, government has started publishing the financial performance report of all federal PSEs which will be available on its website.
