Pakistan's public sector enterprises suffocate under mounting PKR 1.7 trillion debt
Pakistan government's efforts to reform its public sector enterprises (PSEs) have been marred by persistent challenges, as highlighted by recent fiscal data and international funding initiatives, Dawn reported.
Despite a substantial loan from the Asian Development Bank (ADB) aimed at bolstering reforms, the cumulative debt of PSEs has soared to PKR 1.7 trillion, with an additional borrowing exceeding Rs 43 billion in the fiscal year 2024.
Economic priorities underscore the urgency of privatising PSEs to alleviate the strain on the national budget, a crucial step also mandated for securing future loans from the International Monetary Fund (IMF). The allocation for PSEs in the 2024-25 budget saw a dramatic increase, reaching PKR 1.267 trillion, largely earmarked for subsidies and grants, marking a 104 per cent surge from the previous fiscal year.
The State Bank of Pakistan's latest report reveals a notable decrease in PSE borrowing during FY23, contrasting sharply with the PKR 43.5 billion borrowed in FY24 alone, adding to the existing debt burden. Despite receiving substantial funding from the ADB, which initiated the USD 300 million Public Sector Enterprises Reform Programme (PSERP) in 2016, aimed at enhancing corporate governance and operational efficiency, meaningful reforms have been elusive.
Former Finance Minister Ishaq Dar, during his tenure, committed to improving PSE performance, particularly in sectors like railways, Pakistan Steel, and Pakistan International Airlines (PIA). However, the political
