ISLAMABAD - Pakistan will privatize all state-owned enterprises, with the exception of strategic entities, Prime Minister Shehbaz Sharif said on Tuesday, broadening its initial plans to sell only loss-making state firms to shore up its finances.

The announcement came after Sharif headed a review meeting of the privatization process of state enterprises, according to a statement from his office, which discussed a roadmap for privatization from 2024 to 2029.

"All of the state-owned enterprises will be privatized whether they are in profit or in losses," Sharif said, adding that offloading the SOEs will save taxpayers' money.

The announcement came a day after an International Monetary Fund mission opened talks in Islamabad for a new long-term Extended Fund Facility (EFF), following Pakistan's completion of a $3 billion standby arrangement last month, which had averted a sovereign debt default last summer

The statement did not clarify which sectors would be deemed strategic and non-strategic.

The announcement came a day after an International Monetary Fund mission opened talks in Islamabad for a new long-term Extended Fund Facility (EFF), following Pakistan's completion of a $3 billion standby arrangement last month.

Privatization of loss-making SOEs has long been on the IMF's list of recommendations for Pakistan, which is struggling with a high fiscal shortfall and a huge external financing gap. Foreign exchange reserves are hardly enough to meet up to a couple of months of controlled imports.

The IMF says SOEs in Pakistan hold sizable assets in comparison with most Middle East countries, at 44 percent of GDP in 2019, yet their share of employment in the economy is relatively low. The Fund estimates almost half of the SOEs operated at a loss in 2019.

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Patchy success so far

Past privatization drives have been patchy, mainly due to a lack of political will, market watchers say.

Any organization that is involved in purely commercial work can't be strategic by its very nature, which means there can't be any strategic commercial SOEs, former privatization minister Fawad Hasan Fawad told Reuters on Tuesday.

Islamabad has for years been pumping billions of dollars into SOEs to keep them afloat, including one of the largest loss-making enterprises Pakistan International Airline, which is in its final phase of being sold off, with a deadline later this week to seek expressions of interest from potential buyers

"So to me there are really no strategic SOEs," he said.

"The sooner we get rid of them the better. But this isn't the first time we have heard a PM say this and this may not be the last till these words are translated into a strategic action plan and implemented."

Islamabad has for years been pumping billions of dollars into SOEs to keep them afloat, including one of the largest loss-making enterprises Pakistan International Airline, which is in its final phase of being sold off, with a deadline later this week to seek expressions of interest from potential buyers.

The pre-qualification process for PIA's selloff will be completed by end-May, the privatization ministry told Tuesday's meeting, adding discussions were underway to sell the airline-owned Roosevelt Hotel in New York.

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It also said a government-to-government transaction on First Women Bank Ltd was being discussed with the United Arab Emirates, and added that power distribution companies had also been included in the privatization plan for 2024-2029.

"The loss-making SOEs should be privatized on a priority basis," Sharif said.