It was billed as Pakistan’s smartest economic move in a generation. A fund that would harness the earning power of the country’s most profitable state companies, attract Gulf investment, and build the financial firepower to transform the economy.
Three years later, it has never made a single investment. It has attracted no Gulf billions. And the law that created it is being rewritten under pressure from the IMF — which, at one point, demanded the entire thing be abolished.
This is the full story of the Pakistan Sovereign Wealth Fund — where it came from, what went wrong, what is being fixed, and what the amended version will actually be allowed to do.
What Is a Sovereign Wealth Fund?
Before the Pakistan-specific details, the concept itself matters.
A sovereign wealth fund is a state-owned investment vehicle that manages a country’s financial assets — typically surplus revenues from natural resources, foreign exchange reserves, or privatisation proceeds — and invests them to generate long-term returns. Norway’s Government Pension Fund Global, worth over $1.7 trillion, is the world’s largest. The UAE’s Abu Dhabi Investment Authority manages over $700 billion. Saudi Arabia’s Public Investment Fund controls nearly $900 billion.
What these funds share is a source of capital: surplus. Norway invests oil export revenues. Abu Dhabi invested decades of petroleum wealth. They have money to deploy.
Pakistan’s situation is different. National Assembly Opposition Leader Omar Ayub noted: “Sovereign wealth funds are established by countries that have ample cash. Pakistan is a cash-starved country.” That observation — made by the opposition — captures the central tension that has haunted the PSWF from its first day.
How the Fund Was Created: The 2023 Law
The Pakistan Sovereign Wealth Fund was established by the Pakistani government through the Pakistan Sovereign Wealth Fund Act 2023. On July 31, 2023, the National Assembly approved legislation to establish the fund. On August 2, the Senate passed the law.
The idea was to capitalise the fund not with cash reserves Pakistan does not have, but with equity — the government’s shareholdings in its most profitable state-owned enterprises.
In August 2023, the Government of Pakistan transferred its entire shareholding in seven companies worth Rs2.3 trillion — $8.06 billion at the time — to the fund. The seven entities are Oil and Gas Development Company Limited, Pakistan Petroleum Limited, Mari Petroleum, National Bank of Pakistan, Pakistan Development Fund, Government Holdings Private Limited, and Neelum-Jhelum Hydropower Company.
These are not marginal companies. Four of the seven companies earned a net profit of Rs386 billion in fiscal year 2022-23 alone, including Rs225 billion by OGDCL — Pakistan’s most profitable state-owned entity.
The original law gave the PSWF sweeping powers. Under the existing law, the fund is empowered to handle the sale and purchase of domestic and foreign equity securities, debt securities, derivatives, commodities, and other financial assets. It can also enter agreements as a private party or implementing agency in public-private partnerships, and it can acquire, own, sell, or transfer any tangible and intangible, movable or immovable assets. The law also permits the State Bank of Pakistan to lend money to the fund.
What It Was Actually Designed to Do
The fund’s stated purpose was to contribute to sustainable economic development by increasing local investment and attracting Gulf Cooperation Council money into Pakistan.
But the real motivation was more transactional.
The original idea of setting up the fund was to sell the fund-managed companies to Middle Eastern countries. The UAE rulers had refused to give any new lending to Pakistan and instead asked Prime Minister Shehbaz Sharif to sell the stakes in its companies and also give seats to the UAE firms on these boards in return for equity investment.
In plain terms: the UAE wanted equity in Pakistan’s most valuable companies in exchange for the financial support Pakistan desperately needed. The PSWF was the legal vehicle designed to make those share sales possible — bypassing the competitive bidding requirements of the Privatisation Commission Ordinance, the Public Procurement Regulatory Authority Ordinance, and the State-Owned Enterprises Act.
The PSWF is exempted from three core laws: the Privatisation Commission Ordinance, the Public Procurement Regulatory Authority Ordinance, and the State-Owned Enterprises Act 2023. The government wanted to sell the shares of these companies to foreign nations without following the competitive bidding process defined under the Privatisation Ordinance.
This exemption — allowing negotiated, non-competitive asset sales to foreign governments — is what triggered the IMF’s most severe objections.
The IMF Strikes: Three Years of Escalating Objections
The International Monetary Fund’s objections to the PSWF did not arrive gently. They escalated from concern to demand to ultimatum.
Round 1: Governance and Transparency Concerns (2023–2024)
When the fund was created in August 2023, the IMF immediately flagged concerns. IMF staff highlighted “the need to ensure a level playing field with regard to the investment environment and avoid a watering down in governance standards.” These issues, the Fund noted, “remain to be addressed.”
Round 2: Demand for Abolition (July 2024)
The IMF’s patience ran out in the summer of 2024.
The IMF immediately sought a commitment to abolish the fund and set a September 30 deadline to repeal the Pakistan Sovereign Wealth Fund Act 2023. A meeting between IMF Mission Chief Nathan Porter and finance ministry officials remained inconclusive, with the IMF steadfast in its demand to abolish the fund.
The IMF and World Bank both called for the abolition of the PSWF, citing a lack of transparency and questioning the fund’s effectiveness in managing public assets.
Pakistan resisted abolition — and survived that round by making binding written commitments to amend the law by December 2024.
Round 3: Missed Deadline (December 2024)
The federal government failed to meet the key IMF condition to amend the Pakistan Sovereign Wealth Fund Act by December 2024. The Ministry of Finance had committed to revising the law to address governance structure issues and mandate competitive bidding for state asset sales. However, Ministry spokesperson Qumar Abbasi confirmed that the amendments were not finalised by the deadline.
Pakistan had missed the deadline the government itself had set — in writing — with the IMF. That failure cost credibility with the Fund and delayed the broader $7 billion EFF programme negotiations.
Round 4: The Amendment Bill, 2026
The government tabled the Pakistan Sovereign Wealth Fund Amendment Bill 2026 in the Senate. Parliamentary Affairs Minister Tariq Fazal Chaudhry presented the bill on behalf of Finance Minister Muhammad Aurangzeb. The bill aims to introduce “fiscal safeguards, improving the governance structure and enhancing public disclosure and reporting requirements.” The bill was referred to the Senate Standing Committee on Finance and Revenue.
The amended framework, agreed between Pakistan and the IMF, fundamentally transforms what the PSWF is allowed to be.
The Revised PSWF: What It Can and Cannot Do
This is the most important section for anyone wondering whether the fund is safe.
The amended PSWF will be stripped of most of the powers that made the original law dangerous. Here is what the new framework prohibits — explicitly and binding under IMF programme conditions:
No borrowing of any kind. The revised framework will bar the fund from borrowing or taking on debt in any form. It will not be permitted to issue guarantees or provide collateral, including against the shares or assets of SOEs under its control.
No lending. It will also be prohibited from lending to public or private entities or to any domestic or foreign person.
No asset sales without competitive bidding. A key change is that the fund will no longer be allowed to directly sell assets to domestic or foreign buyers. Any privatisation or sale of assets of the seven SOEs currently under the fund must instead follow international standards and best practices through open, competitive, transparent and non-discriminatory procedures, with minimum disclosure requirements at every stage, including beneficial ownership.
No retaining revenues. The finance ministry has committed to ensuring fiscal safeguards, including a requirement that all revenues from the wealth fund and its sub-funds go directly to the government. Unlike the original law, the fund will not be allowed to keep money for investment purposes; any such financing would have to be provided through budget allocations under the Public Financial Management Act.
No PPP participation. The SWF will be prohibited from participating in Public Private Partnership projects.
No contributions from state institutions. The fund will be barred from securing financial assets and getting any contribution from the financial institutions and State Owned Enterprises.
No operational launch until parliament approves. Under commitments given by Pakistan, the SWF will not be made operational until amendments to its governing law are passed by parliament. The amendments will be incorporated into law as a structural benchmark following the approval of the FY2026-27 budget.
What remains is a holding company. According to the agreed framework, the SWF’s role will be limited to holding and managing state-owned enterprises on behalf of the state and creating value through operational and financial improvements.
Who Controls the Fund?
The governance structure of the original PSWF was one of the IMF’s most specific objections — and it has been substantially reformed.
Minister of State for Finance Ali Pervez Malik said that the supervisory council and an advisory council of the PSWF have not been made operational because of the prevailing confusion. He agreed that there was an overlapping of the wealth law with the privatisation and the SOEs laws.
The role of the Special Investment Facilitation Council — the civil-military body that has been closely associated with the PSWF’s direction — has also attracted scrutiny.
Pakistan’s Ministry of Finance acknowledged that the SIFC lacks institutionalised transparency. The IMF warned this could further damage investor confidence and weaken policy stability. The document noted that unclear decision-making mechanisms within the SIFC, especially regarding strategic investment concessions and regulatory relaxations, create information gaps that heighten perceived governance risks.
The IMF raised concerns over Articles 10F and 10G of the Board of Investment Act, which grant sweeping powers and immunity to SIFC officials, potentially diluting accountability. The Fund also criticised the parallel functioning of the Board of Investment and the SIFC, arguing that overlapping mandates fuel confusion and weaken governance.
Under the revised framework: appointments to the SWF board and advisory committee will be made through transparent, merit-based and participatory processes aimed at protecting professionalism and independence from undue public or private influence. The commitments also include effective cooling-off periods to strengthen independence. The accountability mechanism under the SOEs Act will also apply to the wealth fund and the companies it manages. Exemptions currently available under Section 50 of the SWF Act will be withdrawn.
Section 50 — which exempted the seven SOEs from the full governance requirements of the SOEs Act 2023 — was perhaps the most controversial single provision in the original law. Its removal brings OGDCL, PPL, National Bank of Pakistan and the other five companies back under the standard accountability framework that applies to all state-owned enterprises.
Are Your Taxes Safe?
This is the question every Pakistani taxpayer deserves a direct answer to.
The original PSWF law created a genuine risk: Pakistan’s most profitable state companies — entities that collectively earn hundreds of billions of rupees in annual profit, pay dividends to the government, and generate tax revenues — could be sold to foreign governments through a negotiated process outside normal competitive bidding. The proceeds could, under the original law, be retained by the fund rather than flowing to the national exchequer. The fund could also borrow, take on contingent liabilities, and participate in PPPs — all of which could create off-budget obligations that ultimately fall on taxpayers.
The IMF’s objection was precisely this risk. A government that loses control of its most profitable companies to opaque negotiated sales loses both strategic assets and the revenue stream they generate.
Under the amended framework:
Every rupee of revenue generated by the fund’s companies goes directly to the government. The fund cannot borrow or create any liability. Asset sales must go through open, competitive, transparent bidding — not negotiated deals with Gulf sovereigns. The fund cannot invest or deploy capital independently. Its entire purpose is holding and operationally improving seven companies that remain in public ownership.
That is significantly safer than the original design. Whether the amendments pass parliament before the budget, whether the government actually implements them faithfully, and whether the board appointments are genuinely merit-based — those are the open questions. The commitments are binding under the IMF programme, which creates a genuine accountability mechanism.
Why It Still Has Not Launched — and What Happens Next
The fund has remained non-operational because of the IMF’s objections. Three years after its legislation passed, the PSWF has not made a single investment, hired a single analyst, or executed a single transaction.
The government is in the process of hiring an international consultant to provide expert advice on how to proceed with the fund. A total of 18 international firms, including Accenture, Bain & Company, and McKinsey & Company, have been shortlisted for the assignment. The selected firm will guide the Finance Division in developing the institutional framework necessary for the PSWF, which is expected to manage key public sector entities and align with global standards.
The timeline now is: Amendment Bill passes through Senate Standing Committee → Full Senate approval → National Assembly approval → Presidential assent → Fund becomes legally operational. Given the missed December 2024 deadline and the delayed March 2026 deadline, realistic expectations suggest the amended fund will not be operational before the end of 2026 at the earliest.
What Successful Sovereign Wealth Funds Look Like
Pakistan’s experience is instructive when held against models that worked.
Singapore’s Temasek was capitalised in 1974 with stakes in Singapore Airlines, DBS Bank, and Singapore Telecommunications — state companies, just like Pakistan’s. The critical difference was governance: Temasek operates with complete independence from the government, publishes detailed annual reports, has a professional management team insulated from political interference, and reinvests returns back into the portfolio rather than surrendering them to the treasury.
Norway’s Government Pension Fund was capitalised with genuine surplus — oil revenues that exceeded government spending needs, ring-fenced explicitly to prevent spending on current consumption.
Pakistan’s original PSWF design combined the worst of both models: state company assets like Temasek, but without Temasek’s governance independence; and investment ambitions like Norway, but without Norway’s surplus capital.
The amended version narrows the ambition considerably. A pure holding company that manages SOEs better and delivers dividends to the government is a defensible, if modest, proposition. It is not a sovereign wealth fund in the traditional sense. It is an SOE management structure with a grander name.
Frequently Asked Questions (FAQs)
Q: What companies are under the Pakistan Sovereign Wealth Fund?
The PSWF holds the government’s shareholdings in seven state-owned enterprises: Oil and Gas Development Company Limited, Pakistan Petroleum Limited, Mari Petroleum, National Bank of Pakistan, Pakistan Development Fund, Government Holdings Private Limited, and Neelum-Jhelum Hydropower Company. The combined value of these stakes was Rs2.3 trillion — approximately $8 billion — at the time of transfer in August 2023.
Q: Why did the IMF object to the Sovereign Wealth Fund?
The IMF had two primary objections. First, the original law exempted the seven SOEs from core governance laws including the SOE Act 2023, the Privatisation Commission Ordinance and the Public Procurement Regulatory Authority Ordinance — meaning they could be sold to foreign governments through negotiated deals without competitive bidding. Second, the fund could borrow, retain revenues, participate in PPPs and accumulate contingent liabilities — all creating off-budget fiscal risks. In July 2024, the IMF actually demanded the fund be abolished and set a September 30 deadline for repeal of its law.
Q: What powers has the amended PSWF lost?
Under the IMF-required amendments introduced in 2026, the PSWF is prohibited from: borrowing or incurring debt, providing guarantees or collateral, lending to any entity, retaining revenues, participating in PPPs, acquiring financial assets, receiving contributions from the State Bank of Pakistan or other SOEs, and selling assets without open competitive bidding. It is reduced to a holding company that manages the seven SOEs on behalf of the state.
Q: Will the government sell OGDCL or other companies through this fund?
Not through negotiated deals anymore. The amended framework requires any future sale of assets under the fund to go through open, competitive, transparent and non-discriminatory bidding with full disclosure of beneficial ownership at every stage. The direct negotiated sales to Gulf governments that the original law enabled are no longer permitted under the revised framework.
Q: Is the fund operational yet?
No. The Pakistan Sovereign Wealth Fund has remained non-operational since its establishment in 2023. Under the IMF conditions agreed in 2026, it cannot be made operational until the amendment bill is passed by parliament. The Amendment Bill 2026 was tabled in the Senate and referred to the Senate Standing Committee on Finance and Revenue. Parliamentary approval is expected to be a structural benchmark linked to the post-budget IMF review.
Q: What happens to the dividends and profits these companies earn?
Under the amended framework, all revenues generated by the fund and its sub-funds must go directly to the federal government treasury. The fund is explicitly barred from retaining any proceeds for investment purposes. Any capital allocation to the fund for investment would have to go through the federal budget under the Public Financial Management Act 2019 — making it fully transparent and subject to parliamentary scrutiny.