Pakistan Institute of Development Economics



Fiscal Imbalances as an Obstacle to Privatization Effort

Author: A.R. Kemal

Pakistan has been pursuing privatization policies including market liberalization and divestiture of public corporations for the last ten years with a view to raising levels of investment and improving efficiency levels. However, privatization efforts so far have not been very successful in increasing the level of investment in the country. The failure of privatization to boost investment in general, and private investment in particular, is generally attributed to an ambivalent attitude of the government towards privatization. It is argued that even though import and export policies have been liberalized, investment sanctioning requirements have been by and large waived and price controls have been lifted, yet the trade regime continues to be restrictive, the establishment of large industrial projects remain subject to investment sanctions and price controls can be invoked on one pretext or another. Moreover, despite the government’s pronouncements no public sector corporation could be divested during the last few years. These cast serious doubts on the efficacy of the government’s privatization policy.

A.R. Kemal

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