Public sector corporations 'bleed' treasury, haemorrhage economy, says finance adviser
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Hafeez Sheikh, adviser to the prime minister on finance, revenue and economic affairs, on Friday said that efforts to improve fiscal and macroeconomic sectors are doomed to fail if public sector enterprises (PSEs) "continue to haemorrhage" the economy.
Sheikh, who was addressing a conference in Islamabad, regretted that in Pakistan, "public sector corporations [...] continue to dominate key areas of the economy" even though they do not perform.
"The public sector corporations bleed about Rs200 billion a year," he revealed. "The electricity sector alone causes about Rs3-4bn (in losses to the national treasury) every year. They [PSEs] have accumulated a circular debt of Rs1,600bn."
He went on to say: "Clearly any good efforts on the macroeconomic side, on the fiscal responsibility side [...] are subverted [...] we cannot have these major components not perform and continue to haemorrhage us."
He recalled that when he was minister for investment and privatisation, he had privatised 34 companies in different sectors, including telecom and banking, between 2003-2006. He suggested that that approach may be "the way forward".
Sheikh also talked about ongoing negotiations with the International Monetary Fund (IMF) for a bailout package and said they were moving forward in a positive direction. He said that the IMF package will help in bringing about development in the macroeconomic sector.
He was optimistic that securing an IMF package "will send positive signals" to countries as well as other financial institutions regarding Pakistan's commitment to bring about "fiscal discipline".
The economic adviser also said that the upcoming budget for fiscal 2019-20 will aim to achieve sustainable economic growth by addressing the gaps between current account deficit and fiscal deficit.
He further said that the policies of the Pakistan Tehreek-i-Insaf's government so far had led to an increase in exports and remittances and decrease in imports. Steps to increase revenue are also being taken, he added.
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Comments (75) Closed
May 03, 2019 02:19pm
Except Zardari, every government including Musharraf tried to privatize the PIA, but failed. It cannot be done and will not be done.
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May 03, 2019 02:21pm
Blame game? Is pointing fingers any solution? What good are you for if unable to solve the crises?
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May 03, 2019 02:24pm
I thought while in opposition PMIK was an ardent supporter of public sector and against privatisation? Now he’s making another U turn it seems by the way his advisor is speaking. What with all his plans for welfare state and all? Finally given up in the face of bankruptcy?
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May 03, 2019 02:27pm
Shaikh has hit the nail on the head. Forward to fiscal responsibility...
Gordon D. Walker
Canada
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May 03, 2019 02:35pm
Right on target agreed.
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May 03, 2019 02:43pm
That's a big economic tragedy in almost all nations of South Asian origin in general and the former British colonies in particular wherein, change of centuries old mindset, head and heart is hard to come by easily and in a hurry.
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May 03, 2019 02:43pm
What is holding up their privatization? As to exports :The PKR is about twice the rate of the Indian rupee and higher than the BD taka. At that advantage in exports they should be able to seriously better them in international markets but they do not.
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May 03, 2019 02:46pm
Without a doubt public corporations are not managed in the public interest in Pakistan. Those in charge are licensed to steal, and manage them in their own interests.
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May 03, 2019 02:55pm
He has no plan to solve the problem, everyone knows about the problem it has not disappeared since he was finance minister. It is all political talk without any substance.
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May 03, 2019 02:57pm
Yes please privatize loss making enterprises and not sell valuable efficient assets like your predecessor was bent upon .
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May 03, 2019 02:58pm
There is a lot of accountable work for the government to put the country's economy back on the right track.
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May 03, 2019 03:07pm
Who ever had been running the PSEs, all the then Prime Ministers were responsible.
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May 03, 2019 03:25pm
Finally, someone is talking sense. I hope Imran Khan extends necessary support to the Finance Adviser to take the difficult, unpopular, yet necessary decisions that will cause short term pain but will better position Pakistan for long term gain.
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May 03, 2019 03:27pm
Please tell us something new. Even a street child can tell that. MNS already said it and tried to sell off PIA on which IK made quite a noise. Please dont try to make way for privatization by telling it. Just tell us what to be done to improve economy? what are the measures for increasing exports etc.
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May 03, 2019 03:31pm
Public sector offices are full of ineffective and inefficient workers .... they got job die to nepotism...now these companies have become liability......privatise these companies immediately.....
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May 03, 2019 03:33pm
Hafiz Shaikh said that “the policies of the Pakistan Tehreek-i-Insaf's government so far had led to an increase in exports and remittances and decrease in imports.” And that was without you or your help, just a reminder. And another reminder to freshen your memory and ours, too. That during your privatisation campaign, in fact ‘garage sale’ of our national assets. You sold Pakistan Telecommunication Limited (PTCL) to some Dubai based buyer at throwaway price and we are still waiting for sales proceeds of $800 million from your favourite buyer. You seem to have forgotten what you did to us but let me remind you that contrary to your hopes people do not have amnesia and they have not forgiven you. There will be a day not in too distant future when you have to account for this or face the music.
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May 03, 2019 03:35pm
Very much true. Come to Sindh to witness yourself that that many Senior government employees (especially Wapda) don't go to their offices for months, yet they enjoy servants and government vehicles and lavish life style. Teacher don't go to school, yet they receive their salaries. There are many individuals who manage to secure multiple government jobs (and take vaccations from their jobs), they even manage to get multiple pensions. Those who regularly go to their offices take heavy bribes in order to maintain their lavish life style. There must be good ones also, but the major lot is corrupt just like our politicians.
Pin point any government organization without heavy corruption. It is a writing on the wall. Why the government is not controlling them?
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May 03, 2019 03:49pm
Please don't restate the problem. Find solutions...
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May 03, 2019 03:51pm
So sell it to China?
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May 03, 2019 03:58pm
But without these public sector entities, inflation would be sky high making common peoples live impossible to live. Thanks to capitalism.
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May 03, 2019 04:10pm
Did your previous record say the same
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May 03, 2019 04:17pm
Absolutely correct ...... and that is how own country gets poorer by the day and our politicians and bureaucrats richer.
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May 03, 2019 04:20pm
Wasn't the IMF already agreed ? Who is / was lying then ?
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May 03, 2019 04:36pm
Hes right and thats the real blackhole of our economy, we are wasting our efforts on talking about crrouption and increasing taxes, even if so called looted money got back and taxes increased to 200 percent, all money will still sink to government employees luxuries which also cause hyper inflation as their salaries and perk are way beyond private sector employees so does their expanding, good step, now just privatize them with full force and dont giveup no matter how much they protest and give relief to general public in term of tax reduction.
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May 03, 2019 04:36pm
Privatization of PIA and Steel Mills is a must. However don't keep your hopes high as Imran Khan is against privatization - due to his socialist thoughts. You will be following Asad Umar too if you pursue privatization as Imran Khan is against that.
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May 03, 2019 04:42pm
IMF actor again ready to dispose off national gems for peanuts
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May 03, 2019 04:57pm
So the same old mantra of Hafeez Sheikh - echo from his previous tenure as Finance Minister - privatization of public enterprises, so now we will have Pak Steel, PIA etc. on sale again. When and how we will learn that economy is not only about public sector organization, when, please, when.
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May 03, 2019 05:08pm
Does this not stink of colonisation. Instead of trying to fix our public institutions, this expert is telling us to stop the “bleeding”. Please, we are not stupid. Public institutions are bleeding because they are weak. Taking resources away will weaken them further. Why don’t you just close down all public institutions in one go?
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May 03, 2019 05:08pm
Sell all public sector companies to Chinese companies
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May 03, 2019 05:16pm
Good luck. Work hard for your country and you will reap the rewards
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May 03, 2019 05:24pm
The Rich are sucking Rs. 200 Billions of innocent poor. Pakistan can not withstand such further blows.
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May 03, 2019 05:27pm
Every one knows public sector corporation pain in the neck. Nothing new.
So privatization is the only solution you have in your mind Dr. Sheikh. Ok. That is a good model. Only caution is not creating monopolies out of inefficient public sector corporations.
The government job is not to produce and distribute good and services rather government job is to nurture the private sector by designing state of the art infrastructure and defining and designing regulations that help private sector to grow.
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May 03, 2019 05:30pm
No doubt Hafiz she put economy in good condition in Pakistan if all insulation must be privatised without education sector and educational sector all should begate in to public sector because free education will create more jobs
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May 03, 2019 05:43pm
"Steps to increase revenue are also being taken" is certainly a good point but the burden should not fall on low to small middle class only. Besides a lot of money laundered and stashed away by previous rulers and their cronies in overseas properties and accounts must be accounted for and recovered.
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May 03, 2019 06:06pm
he is right
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May 03, 2019 06:20pm
Government should breakup all government owned entities, except railway and post office by provinces and issue IPO for each entity and keep less than 20% of shares and allow companies to compete in each other territories. Follow the example of electric and gas companies in America owned by private business but regulated.
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May 03, 2019 06:23pm
It is very encouraging to hear at last a sane and professional assessment of main cause of country’s present fiscal and current account deficit, being advocated by an experienced economist taking over role of FM. This is no secret that this ongoing bleeding of our ailing economy has cost more than 1.35 trillion so far & adding on 200 billion each year.
It is irony of fate that this decades old distortion in our economic policy matrix which could have been corrected through needed structural & institutional reforms, has been allowed to happen by two previous govts. & the present one too, due to political expediency in play. It is a known fact that almost all of the 195 public enterprises suffer from over staffing due to political appointments, mismanagement, corruption- a cause of drain of financial resources of the country. Therefore, advisor, required to cater for IMF demand of carryingout above reforms, will do a huge favor to the country by privatization of these white elephants.
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May 03, 2019 06:24pm
Absolutely correct! If they are not defense related, sell them to the private sector.
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May 03, 2019 06:37pm
Of course, "Captain Obvious" ! We know and have known this for the longest. The problem is that no one is willing to end corruption legal (in the form of subsidies) or illegal.
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May 03, 2019 07:01pm
Sell public sector to Chinese companies. They will turn them into profit making organisation.
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May 03, 2019 07:02pm
CPEC it seems most people now don't talk about it any more. It was to make Pakistan the richest and the most powerful country on Earth? Remember a time when the comment columns used to be filled with "once CPEC comes.." I thought the new game changer" " the "soon to be" found huge amounts of Oil and Gas would have lasted a little longer. No one talks about the game changer which was stated by none other than Thee Prime minister of Pakistan himself in public. What is it about Pakistani people just saying something and then forgetting it. No one seems to mind it or point it out even. It's like talking about it and asking questions, people and press are scared. Is it? And then the Minister who said there would be so many jobs in 15-20 days that Pakistan would have to import labour. It's not false, I have recordings of them both the PM and the Minister saved from YouTube.
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May 03, 2019 07:10pm
Maulana Fazrul Rahman can change PIA working culture and also transform steel mill
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May 03, 2019 07:18pm
Re-qualify on merit from peon to secretary of ministry and MD of the government sector organization. All non-productive employees and staff should be fired. The ones who are able and qualified should not have fear, they will be able get jobs but those "political cronies" should be shut down forever.
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May 03, 2019 07:20pm
@Uza Syed, and do you realise that if he had not sold off those businesses then today they would have also been over staffed and burning through even more money every year.
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May 03, 2019 07:25pm
This might be an unpopular statement, but it is quite accurate. Public sector corporations are highly subsidized and are still running huge losses.
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May 03, 2019 07:31pm
So many people are employed in public sector companies. Where will they go?
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May 03, 2019 07:37pm
repeating the same statements again and again and again for the millionth time. DO SOMETHING, PRIVATIZE THEM, GET RID OF THEM PIA, STEEL MILLS
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May 03, 2019 07:52pm
Exports have not increased. That's an outright lie.
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May 03, 2019 07:56pm
i was reading last week on Facebook that PIA is now in profit???
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May 03, 2019 08:11pm
@Husain, This is serious, Hussain. Officials and teachers not reporting to work and getting paid are crimes that must be addressed seriously and those responsible, held accountable. Surely the PMIK and finance chief can curb these abuse or fail PK.
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May 03, 2019 08:16pm
@Uza Syed, this is a typical solution offered by Republicans in the US, yet they bailed out GM and Chrysler. I am sure it can be privatised if the fundamentals are sound. Currently, people with friends degrees want to keep their jobs. This has to stop. Biggest reason is safety.
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May 03, 2019 08:17pm
@NewBorn, Benazir started loading pia with safarishees, we are still overstaffed.
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May 03, 2019 08:20pm
@Jehengir khan, privatization seems like a short cut, it isn't. A good CEO can take care of business by firing non performers.
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May 03, 2019 08:26pm
This guy keeps coming back but economy remains in a rut. He must be a failure then
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May 03, 2019 08:35pm
Sell all the bleeding units, put money in your account.
Invite bidders sell them to nears and dears for cheap price.
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May 03, 2019 08:37pm
@Dr. Salaria, Aamir Ahmad, our country's every 2nd person has doctorate degree and country still not progressing?
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May 03, 2019 08:46pm
@NewBorn, Since inception PPP has done everything to harm the economy. LAST nail in the coffin was by the Zardari.
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May 03, 2019 08:54pm
Go ahead and privatize the Steel and electricity. Who is stopping you
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May 03, 2019 09:13pm
Make him FM if this the guy IK want instead of financial advisor. Earlier IMF loans not required now all depends on it.
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May 03, 2019 09:21pm
@NewBorn, ur wrong...IK has failed...musharraf privated many things ...
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May 03, 2019 09:21pm
Private sector ,are they not Pakistani, why they do not wants to build their businesses ,their own PIA,and Steel Mills,,to create jobs ,and bring up economic growth in Pakistan,plus,pay taxes! This is how all the top industries and countries were build up in developed nations. Do the private sector not understand, thie end result will be they will be doing bussiness in stable country ,and they will benefit the most!
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May 03, 2019 09:26pm
@Gulam Ahmed, A comment ridiculing others is always unappreciable and coming out from so-called educated and enlightened person is very disturbing. A country having 87 millions literates and equal numbers as semiliterates and on top a minuscule population of supposedly educated one behaving in such a manner, shows where we stand as a nation. For sure seeing trampling of rights of others consistently by those who think they own the world, has created this fault line in our civil society and sooner we get rid of such attitude the better it is, nothing more or nothing less. Thank you
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May 03, 2019 09:38pm
@Dr. Salaria, Aamir Ahmad, you are absolutely right in your assessment. Be it police, bureaucracy and others, this mindset is always on display because our officialdom are still following centuries old penal code and rules of official business in Conducting day to day work, where the downtroddens and poor masses are treated with contempt with impunity. Till we don’t come out of this catch 22 situation this merry go around will stay continued.
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May 03, 2019 09:54pm
Right. Privitize all of these dead elephants e. G. PIA, PSM, PR etc.
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May 03, 2019 09:56pm
If my economic model is correct, he is trying to selloff key public sector entities to the cronies of THE rulers dead cheap, by following Russian model.
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May 03, 2019 10:28pm
@Prateik, come to private sector and find job like we all does and yes private sector have no job security but half, no pension in some cases, but that's the way of life, its time for them to taste it as well, instead of enjoying their self on us private sector taxpayers money to understand how hard to earn in.
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May 03, 2019 10:45pm
Nothing bleeds if people with integrity appointed as boss/CEO,if PIA and Pak Railway shown progress others can do so,nothing wrong with Pak Steel Mill only non-political management required. PTCL was doing wonderful why it was privatized no logic nothing improve,still $ 800 Million outstanding.
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May 03, 2019 11:04pm
That's the problem almost everywhere - more severe in some countries than others. The news would be what is he going to propose about it.
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May 03, 2019 11:16pm
Looks like the family silver is being readied for sale to fund the real white elephant.
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May 04, 2019 12:12am
Public sector companies should be privatised for the reason that govt has already much more to deliver administratively. People's expectations from the govt increase over time and therefore many areas in economic field are left unattended due to excessive occupation of the latter in the administration. So good sense prevails that controlled privatisation of the public sector companies be an agenda item of the PTI govt.
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May 04, 2019 12:46am
Government has no job running businesses.
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May 04, 2019 03:37am
Of course this capitalist wants to privatise. The real solution is to *expand* public sector. PSE employees are among the most well educated, hard working people. It's corrupt officials within the govt who purposefully interfere with the functioning of PSEs, setting them up to fail so their crony corporate masters can acquire valuable assets at throwaway prices. This has been happening worldwide throughout modern history - wake up people!
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May 04, 2019 02:01pm
Once a privatisation minister always a privatisation minister.
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May 04, 2019 02:02pm
@Ahmed, Because it doesn't work like that. The IMF knows it but it continues to give bad advice.
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May 05, 2019 02:16am
@Uza Syed, don't forget the same govt which own that company gave you US 3 billion loan
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