The Express Tribune’s editorial on Tuesday highlighted Pakistan’s SOEs’ borrowing blitz as
The loss-making entities have set a new record by borrowing a staggering Rs142 billion in just the first eight months of this fiscal year (8MFY24).
This trend is remarkable not only because interest rates are currently sky-high, dissuading most other companies from borrowing, but also because SOEs only borrowed Rs2.5 billion during the same period last year. Despite the ongoing austerity measures in Pakistan, which are meant to stabilize the economy, these lossmaking SOEs are adding to the national exchequer’s burden. While some SOEs are supposed to provide subsidized public services, the majority of major loss makers do not offer any public services that benefit the masses.
For instance, PIA, a flagship example of a failed SOE, offers subsidized airfare to government employees, which is mostly availed of by politicians, senior bureaucrats, and military officers.
Thus, it benefits the rich at the expense of all taxpayers. Furthermore, PIA cannot even pay its tax bills and has refused to repatriate funds from closed stations. Despite a government plan to make it profitable by 2024, PIA’s losses have increased even as its revenue has grown.
As of December, the company’s borrowing had exceeded Rs186 billion. Similarly, Wapda has accumulated a debt of nearly Rs72 billion, and Pakistan Steel Mills, which has been closed for most of the past decade, borrowed Rs42 billion.
The editorial suggests that given these dire circumstances, we must make the tough decision to liquidate these companies to cut our losses, as selling them to make a profit may no longer be feasible.
To read the full article visit www.tribune.com.pk
