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.
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.