Editorial
The recent decision by Prime Minister Shehbaz Sharif to put profitable State-Owned Enterprises (SOEs) up for sale is not without its potential risks. This move, which seems to mark a shift in the government’s approach to managing public assets, could have far-reaching implications. Traditionally, the primary argument for privatizing SOEs has been the financial burden they impose on the public exchequer, particularly in the case of loss-making entities whose deficits are ultimately covered by taxpayers. However, the issue with such SOEs extends beyond mere inefficiency resulting from governmental mismanagement; some of these entities provide essential services regardless of their financial performance.
The decision to sell off profitable SOEs, while potentially beneficial in the short term, raises concerns about the government’s financial position. If the state is in dire need of relief from the financial strain caused by loss-making SOEs, why would it willingly forgo the revenue generated by profitable entities? This move could potentially leave the government in a vulnerable position, with limited options for addressing its accumulated debts in the future.
Despite the potential benefits, the concern persists that relying solely on privatization proceeds to address immediate financial pressures is a short-term solution. Previous privatization revenues have often been used to meet debt obligations, yet this approach has failed to alleviate the growing debt burden. Prime Minister Shehbaz Sharif’s recent comments about the government’s lack of interest in running businesses underscore the need for a more innovative use of privatization proceeds, one that extends beyond servicing existing debts. Embracing public-private partnerships as a potential model for all enterprises could offer a more sustainable approach to leveraging privatization revenues.
Ensuring a more sustainable financial future requires a comprehensive review of the privatization list and the exploration of innovative solutions, such as public-private partnerships. This thorough approach will help the government avoid potential pitfalls and make informed decisions, providing reassurance about the future of the country’s finances.
