The Wall Street Journal interview: ‘Pleased’ with slow but steady turnaround

“I am quite happy and satisfied that things are moving the way they should be. We are right on track,” says Finance Minister Ishaq Dar. PHOTO: ONLINE/FILE

NEW YORK: The Pakistan government expects to complete a series of large privatisation transactions this spring, which will raise much-needed foreign exchange and dispel concerns about the slow pace of reforms, said Finance Minister Ishaq Dar in an interview with a leading American business and financial newspaper.

In addition to billions in revenue from sales of state assets, the government is also looking for as much as $5 billion from the spectrum auction, Dar told The Wall Street Journal.

Another plan in the works is to split into two companies the loss-making flag carrier, Pakistan International Airlines (PIA), ahead of selling a stake, he said.

In a dispatch from Islamabad published Tuesday, the newspaper noted that Prime Minister Nawaz Sharif inherited a troubled economy.

Since then, it said the government took major steps to cut subsidies and eliminate debt in the electricity sector, reducing blackouts. It also negotiated a $6.6 billion deal with the International Monetary Fund (IMF), staving off default.

The economy has since shown signs of reviving, even though growth barely keeps up with the birthrate, the Journal said, noting IMF’s acknowledgement this month of the tentative turnaround, especially in the large-scale manufacturing and services sectors, and raised its forecast for gross domestic product growth this fiscal year to 3.1% from the previous estimate of 2.8%.

The government is much more optimistic, expecting growth of around 4.4%.

“I am quite happy and satisfied that things are moving the way they should be. We are right on track,” Dar was quoted as saying by the Journal. “We are pursuing and taking the most difficult decisions, a few of which are politically unpopular. But, to fix the economy, those stabilising measures as well as structural reforms were necessary.”

Soon after taking office, the Journal noted, the government pledged to sell stakes in 31 state-owned companies. “Many of these, however, are still in the process of selecting new management teams,” it said.

Dar said in the Journal interview first on the block would be government stakes in petroleum companies and in lenders such as Habib Bank Ltd., Allied Bank Ltd. and United Bank Ltd.

Meanwhile, as part of the restructuring, PIA is likely to be split into two companies, with a holding group retaining some Rs250 billion in debt and excess personnel, and a “new” PIA holding the lucrative landing rights and the new aircraft. Then, the government plans to sell a 26% stake in that “new” PIA to a strategic partner, Dar told the Journal.