KARACHI: The heavily indebted government had to face an upsurge in the debts and liabilities of the Public Sector Enterprises (PSEs) in a year, which means much bigger allocations will have to be made in the budget for repayments.

Successive governments have been trying to get rid of the loss-making PSEs but no one succeeded in making it possible despite continued pressure from the IMF to privatise them.

Data released by the State Bank of Pakistan showed that the debts and liabilities of PSEs surged 24.1 per cent to Rs2,332.9bn in September on a year-on-year basis.

These PSEs witnessed 32.7pc or Rs573.6bn rise in debt and liabilities in FY23 over the preceding year.

Govt fails to privatise a single public sector firm despite IMF pressure

However, the growth in the debts and liabilities was 6.5pc in FY22. The loss-making PSEs included PIA, Wapda and others.

However, the first quarter of FY24 noted an increase of just Rs4.8bn in the debts of the PSEs showing the government’s attention towards the increasing burden of the PSEs.

Though the caretaker government took measures which look beyond its mandate, it has so far failed to privatise any loss-making entities.

The PSEs debt in June 2022 was Rs1,393.4bn which rose to Rs1,687.2bn in June this year and inched up to Rs1,698.1bn in September. The liabilities also increased to Rs640.9bn in June 2023 from Rs361.1bn in the same month last year.

The liabilities declined by Rs6.2bn in the first quarter of FY24 to Rs634.7bn.

The data further reveals that the debts and liabilities till June were 2.7pc of gross domestic product (GDP).

The top three loss-making entities were PIA with debt and liabilities of Rs180.6bn till Sept 2023, followed by Wapda Rs92.6bn and Pakistan Steel Rs40.3bn. The data did not reveal the other loss-making PSEs despite huge increases in their debts and liabilities which rose to Rs1,378.7bn in September from Rs1089.7bn in June 2022.

The government is trying to sell out some of PSEs but most analysts said the investors don’t have an attraction for loss-making entities. However, there is no strategy to reduce the losses and make it possible to bring corrections to potential entities like PIA.

The national airline has been losing space due to private operators. Similarly, a lot of discussions were noted at the top level of the government about the revival of Pakistan Steel but so far nothing has been done.

Published in Dawn, December 24th, 2023

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