Selling National Assets

In an attempt to protect the country from debt default, the government has decided to sell national assets to foreign countries with the hope that this short-term relief will attract external investors and encourage business activity. The Inter-Governmental Commercial Transaction Ordinance has not been signed by President Arif Alvi yet but considering the pace with which the economic environment in Pakistan is deteriorating, it is only a matter of time.
With barely any foreign reserves available, loss of investor confidence and the steady devaluation of the rupee by as much as 8.3%--lowest it has been since November 1998—the ad hoc ordinance presents a way through which the state can finance the debt, instead of defaulting on it. Selling shares worth $2.5 billion of oil and gas companies and power plants will significantly reduce economic burden and could lead to productive developments within each organisation. It would further bring in a share of taxes, which foreign entities would have to pay, that the government desperately needs.
At the same time however, selling of vital national assets is a risk with immense long-term harms. Even if these assets produced little revenue, it was still some form of steady income that the government was reliant upon. In the long-term, the government may lose control over the companies and vested interests may seep in, deeming Pakistan to a future molded according to the needs and wants of external actors.
The ordinance further abolishes all regulatory requirements for such intra-governmental transactions and protects them from opposition by provincial governments as well as petitions in courts. This means that certain authorities will be able to act unilaterally and with impunity. Even though this particular version of the ordinance has not been passed yet, one can clearly understand why there may be reservations. Our government needs reliable revenue streams and must address larger barriers in the way of economic growth. Selling national assets that were built and developed through immense effort is a short-term solution that may have a more negative impact than previously thought.

ePaper - Nawaiwaqt