Public sector companies accumulate Rs 833b in debt & liabilty

The State Bank of Pakistan Bulletin for the current month shows that the public-sector enterprises have been accumulating debt to alarming levels increasing 36.7pc in 2016 compared to an increase of 6.6pc in 2015, reported a national daily. The staggering increase has been largely due financing increasing expenses which have led to the widening of fiscal deficit gap.  During the first half of 2016-17, the rise in fiscal deficit has almost doubled compared same period a year ago. The debt and liability of Pakistan State-owned Enterprises (PSE) stood at Rs 833b in 2016 which represents an increase of 25pc compared to a rise of 4.2pc a year back.

The government is constrained to continue domestic debt servicing as it barely makes interest payments on outstanding debt and continues to reschedule principle payments. The loss-making PSEs continue to add to the burden of the government.In addition, the present government has been unsuccessful in privatising the loss-making PSEs. Instead, it has been selling profit-making sectors in PSEs such as the OGDC.

The report revealed PIA as the largest loss-making PSEs. Its debt has risen to a striking Rs103.2bn. Despite poor performance of the company, no concrete steps are taken to improve accountability and streamline its operations.

Pakistan Steel, which was a profit-making entity in 2007, now has an accumulated debt of Rs43.2bn. Not only has the company been unsuccessful in being privatised but the issue has been highly politicised.

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Water and Power Development Authority (Wapda), another loss-making sector’s debts have been rising to as high as Rs 62bn. Despite the drop in oil prices, per unit costs of electricity have continued to mount.

 

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