Pakistan’s state-owned enterprises (SOEs) have become a staggering financial burden, draining the economy with Rs851 billion in losses and accumulating Rs9.2 trillion in loans in 2023-24—an amount nearly equal to the total revenue collected by the Federal Board of Revenue (FBR). The recent report by the Ministry of Finance, mandated under the IMF programme, paints a grim picture of inefficiency, financial mismanagement, and misplaced priorities.
While some SOEs remain profitable, their revenues are effectively neutralized by the hemorrhaging losses of others. The power sector continues to be the biggest drain on public funds, while the National Highway Authority (NHA) alone reported a staggering Rs295.5 billion in losses. Pakistan International Airlines (PIA), Pakistan Railways, and Pakistan Steel Mills are among the many enterprises that exist on life support, sustained only by heavy government subsidies and grants worth Rs1.15 trillion—money that could have been directed towards essential development projects.
It is deeply concerning that despite a 5.26% increase in overall SOE revenues, losses surged by 89%. The government’s Rs1.586 trillion fiscal bailout, which accounted for 13% of federal budget receipts, overshadowed the national development budget. This raises an uncomfortable question: How long can Pakistan afford to keep funding these failing institutions?
There is no denying that the privatisation of SOEs, particularly PIA and power distribution companies (DISCOs), is now a necessity rather than a choice. The government, in consultation with the World Bank, has acknowledged the urgency of reforms and vowed to ensure transparency in the process. However, previous attempts at privatisation have been mired in controversy, bureaucratic delays, and political resistance. Without decisive action, these loss-making entities will continue to stifle economic growth, divert resources from vital sectors, and deepen Pakistan’s fiscal woes.
The time for cosmetic reforms is over. If Pakistan is to achieve economic stability, a transparent, well-executed strategy to restructure or privatise failing SOEs must be implemented without delay.
