Bleeding SOEs

Few indicators capture the depth of Pakistan's fiscal malaise as starkly as the performance of its state-owned enterprises. The latest figures released by the Ministry of Finance make for grim reading: in the first full fiscal year of the current government, net losses of SOEs ballooned by 300%, while taxpayer-funded fiscal support surged to Rs2.1 trillion. This is a horrific structural failure that continues to drain public resources and undermine economic stability.

The headline numbers are troubling. Aggregate SOE revenues fell by Rs1.4 trillion to Rs12.4 trillion in FY25, while overall net losses widened sharply to Rs122.9 billion from Rs30.6 billion in the same year. This deterioration occurred despite repeated pledges over the years - by successive governments - to reform, restructure or privatise these entities. Instead of improvement, the first full year of the current administration has reinforced a familiar pattern where inefficiency is absorbed by the exchequer, while accountability remains elusive. To be sure, the Ministry of Finance has pointed to external factors, particularly reduced profitability in the oil sector due to lower international prices.

Yet this explanation only goes so far. Aggregate profits of profit-making SOEs declined by 13%, while losses remain stubbornly concentrated in a handful of entities, especially in transport and power distribution. The National Highway Authority and power distribution companies continue to bleed, weighed down by structural flaws and operational inefficiencies that have been discussed ad nauseam but rarely addressed with resolve.

What remains missing is political will. As long as SOEs are treated as instruments of patronage or employment buffers, meaningful reform will remain out of reach. Entities that perform public service functions must be transparently compensated through the budget, while those that are commercially unviable should be restructured, merged or exited altogether. Continuing to pour trillions into the same leaky vessels is nothing but willful disregard for the public purse.