Those who bought tickets from Pakistan International Airlines recently rued the day as hundreds of flights have been cancelled recently. This is unsurprising, given that the country’s state-owned enterprises (SOE) are in shambles.

The worst in South Asia, according to the World Bank, the SOEs burden a country that had to scramble to stay afloat. SOE revenues are akin to a man trying to fill a bucket with drops, while their losses are a flood of water trying to drown the country. According to the Finance Ministry, 212 SOEs are operating in various sectors of the economy.

In recent years, the costs to the economy have risen steeply due to the substantial increase in the power sector subsidies, according to the research report “Impact of IMF Programmes: A Context of Pakistan” by the Federation of Pakistan Chambers of Commerce & Industry. The net impact of SOEs has climbed from 9.2pc as a percentage of the budget to 46.2pc in FY22 because of payments to independent power producers.

Though the energy sector’s inefficiencies have exacerbated the costs, the other SOEs also enjoy the government’s largess through subsidies, loans and equity injections as direct support as well as issuing guarantees to allow them to secure loans from commercial banks.

That their losses are unsustainable is pretty obvious logic. SOEs are often used to park employees who enjoy government salaries and perks on taxpayer money. Yet, it is the International Monetary Fund’s arm-twisting that is pushing the government towards rethinking its governance.

Past attempts have failed to stop the bleeding, and the current attempts are not faring well as yet. Just because the government wants to sell doesn’t mean anyone is willing to buy.

Published in Dawn, The Business and Finance Weekly, November 6th, 2023