IMF Flags Risks in ZTBL Privatization, Raises Concerns

IMF warns of impact on small farmers

According to Beyond Time News, the International Monetary Fund (IMF) has raised concerns over Pakistan’s plan to privatise Zarai Taraqiati Bank Limited (ZTBL). The IMF warned that the move could reduce access to credit for small farmers who depend heavily on the institution for agricultural financing.

The concern is especially relevant in a country where around 97% of farmers own less than 12.5 acres of land and rely on institutional support for survival.

Bad loans fall as governance improves

At the same time, ZTBL has shown notable financial improvement. The bank reduced its non-performing loans by about 25%, bringing bad loans down to Rs50 billion.

During the last year alone, bad loans dropped by 14%, reflecting stronger recovery efforts and improved governance practices. Over the past three years, the bank also recovered Rs9.8 billion in defaulted loans.

Officials credit the progress to management reforms introduced after 2022, which helped break long-standing issues of poor oversight and weak recovery systems.

IMF links privatisation to credit risks

However, the IMF has cautioned that privatisation could create challenges for smallholder farmers. It noted that depending on how the process is structured, access to development financing for low-income farmers could be affected.

The warning was included in the IMF’s Governance and Corruption Diagnostic report, which highlighted concerns about financial inclusion in rural areas.

Government moves ahead with sale plan

Despite these concerns, the government is continuing with the privatisation process. The Privatisation Commission has already recommended a transaction structure for ZTBL’s sale to the Cabinet Committee on Privatisation.

Officials say discussions within the government have been divided, mainly due to concerns about whether commercial banks would adequately serve small farmers.

Read more:Pakistan Moves Ahead with ZTBL Privatisation Plan

Strong financial turnaround reported

ZTBL management has reported a significant financial recovery over the past three years. The bank’s cumulative profit reportedly rose to Rs70 billion, marking a major increase compared to previous decades.

Credit disbursement also improved, reaching Rs250 billion in three years, including funding under government agriculture support programmes. The bank’s equity climbed to around Rs95 billion, up from Rs60 billion in 2022.

Farmers remain heavily dependent on ZTBL

Agriculture remains dominated by small landholders in Pakistan. According to the Agricultural Census 2024, 97% of farmers operate on less than 12.5 acres of land.

Many of these farmers live from harvest to harvest and depend on institutions like ZTBL for working capital. Larger landowners make up a very small percentage but control a significant share of farmland.

Conclusion

While ZTBL has shown financial improvement and stronger recovery performance, the IMF has warned that privatisation could weaken access to affordable credit for small farmers. The debate now centres on balancing financial reform with rural economic protection.