KARACHI: The public sector enterprises’ (PSEs) debt has almost soared to Rs1 trillion at the end of third quarter of FY18, State Bank of Pakistan (SBP) reported in its latest issue of Statistical Bulletin for June.

The outgoing government could not resolve the growing problem of PSEs’ debts and it failed to address the issue of Pakistan International Airlines (PIA) and Pakistan Steel Mills (PSM) loaded with huge loans.

The State Bank reported the total debts and liabilities of PSEs till end of March FY18 stood at 3.5 per cent of GDP or Rs996.4 billion.

The SBP data from December 2016 shows the debts and liabilities of PSEs jumped by one percentage point in 15 months from 2.5 to 3.5pc in March.

Despite governmental efforts in parliament to get everyone on board to privatise the loss-making PSEs, the Privatisation Commission constituted by it failed to come up with a formula acceptable to other stakeholders of the PSEs.

The debts of these enterprises reached 2.9pc in March against 2.4pc in the same month last year, indicating their rising debt burden.

PIA has the highest accumulated debts at Rs148bn as of March. The PIA still needs billions of rupees to meet its expenses as well as to get new airplanes on lease.

The government was willing to privatise the PIA but could not convince other political parties in the parliament. The biggest opposition came from Pakistan People’s Party which also blocked the privatisation of PSM.

The debts of PSM till March stood at Rs43.2bn; the mill has not been operation for around two years now.

The second largest borrower is Water and Power Development Authority as its debts touched Rs124.2bn, up from Rs86bn in March.

No effort has been made to divest this organisation.

Apart from these large PSEs, others’ borrowings also rose to Rs677bn versus Rs523bn in March. Both large and medium PSEs could not be privatised during the last five years.

Some economists believe that since the last two successive governments were unable to create employment, it was easy to keep these money-eating entities running to protect thousands of jobs.

Published in Dawn, June 7th, 2018