ADB offers help to revitalise PIA, Pakistan Railways

ISLAMABAD: Asian Development Bank (ADB) on Tuesday offered Pakistan its technical assistance to turn around loss-making public sector’s entities.

“She (Country Director ADB for Pakistan Xiaohong Yang) offered financial and technical support and expertise in the gas sector as well as introduction of structural reforms in state-owned entities, including Pakistan Railways and Pakistan International Airlines,” a statement said.

Yang, in a meeting with Prime Minster Shahid Khaqan Abbasi, said ADB will continue to provide its financial and technical expertise in all mutually agreed areas. She reiterated the ADB’s continued commitment in the energy sector.

The government made several attempts, in the past, to privatise the loss-making PIA, but it had to retreat on public protests. PIA incurred a loss of Rs45 billion during the last year, depicting a 36 percent surge over the previous year. Privatisation of PIA, which is operating on government’s handsome dole-outs, is an unfinished agenda under the reforms introduced by the International Monetary Fund on $6.6 billion extended fund facility loan signed in September 2013. Pakistan Railways also suffered a loss of over Rs26 in the fiscal year of 2016/17.

IMF said annual losses of ailing public sector enterprises in Pakistan swelled to 3.8 percent of GDP. Alone PIA, Pakistan Steel Mills, Pakistan Railways, and distribution companies, are incurring financial losses equivalent to 0.3 percent of GDP, it said in a report.

The ADB’s director further appreciated the progress that the country has made towards overcoming energy deficit by producing surplus generation.

“She also noted robust economic growth which she said was projected to reach 5.8 percent during the next financial year, enhanced revenue generation and structural reforms being undertaken and continued by the present government,” the statement added.

Yang said marked improvement in power sector has not only brought relief to domestic consumers but is also leading to growth in large scale manufacturing.

She said the country’s credit rating has significantly improved during the recent years and the investors are showing keen interest to take benefit of the existing investment opportunities in Pakistan. “Pakistan’s return to international financial market is a clear indication of investors’ confidence in country’s economy.”

Last month, Pakistan raised US dollar denominated sukuk and Eurobond worth $2.5 billion in New York against the total offered amounts from investors by $8 billion in order to stop depletion of foreign currency reserves.

Moody’s Investors Service affirmed the government of Pakistan’s B3 issuer and senior unsecured ratings, and maintained a stable outlook, while global rating agency Standard & Poor’s (S&P) also affirmed Pakistan’s long-term ‘B’ and short-term sovereign credit rating.

S&P also assigned preliminary ‘B’ long-term rating to the dollar-denominated sukuk and senior unsecured notes, betting on the country’s repayment ability. Moody’s also assigned a senior unsecured rating of B3 to sukuk.

“Prime Minister thanked ADB for continued support to infrastructure projects and expressed his optimism that the relationship will grow further as Pakistan enters high economic growth,” the statement added.