Islamabad, March 5, 2025 – Prime Minister Shehbaz Sharif on Tuesday highlighted the urgent need to address the staggering financial losses incurred by Pakistan’s state-owned enterprises (SOEs). The premier emphasized that these entities collectively lose approximately Rs850 billion annually, a figure that is putting immense strain on the national economy.
Speaking at a high-level meeting on economic reforms, PM Shehbaz underscored the necessity of structural changes to improve the performance and governance of SOEs. He directed the relevant authorities to take immediate action to curb financial mismanagement, inefficiencies, and corruption, which are key contributors to these losses.
Mounting SOE Losses and Economic Burden
According to government reports, various SOEs, including Pakistan International Airlines (PIA), Pakistan Steel Mills, and power distribution companies, have been operating at a loss for years. These losses have significantly contributed to Pakistan’s economic challenges, increasing the budget deficit and limiting resources for essential public services.
PM Shehbaz reaffirmed his government’s commitment to bringing reforms to these entities. He stated, “The country cannot afford to sustain such massive financial hemorrhaging. It is imperative to adopt a transparent, accountable, and results-oriented approach to managing state-owned enterprises.”
Addressing Circular Debt in the Power Sector
One of the major financial burdens on the economy is the circular debt in the power sector, which has reached alarming levels. The prime minister directed energy officials to implement policies aimed at reducing transmission and distribution losses while enhancing recovery mechanisms.
The circular debt, which arises due to delayed payments in the power supply chain, has worsened over the years. Experts believe that unless comprehensive reforms are introduced, the power sector will continue to drain government resources.
Government’s Reform Strategy
The Shehbaz Sharif-led government has indicated a multi-pronged approach to tackling SOE losses, including:
- Privatization of Loss-making Entities: Exploring options to privatize or partially divest struggling SOEs to reduce the financial burden on the government.
- Improved Governance and Accountability: Strengthening oversight mechanisms to ensure transparency and prevent financial irregularities.
- Efficiency Enhancement Measures: Implementing strategies to improve operational efficiency and reduce leakages in key sectors such as energy and transport.
IMF and Economic Reforms
The issue of SOE losses and circular debt is also a key concern for Pakistan’s international lenders, particularly the International Monetary Fund (IMF). The IMF has repeatedly urged the government to undertake structural reforms and cut subsidies to ensure fiscal sustainability. Addressing these economic challenges is crucial for Pakistan to secure future financial assistance and maintain investor confidence.
Conclusion
PM Shehbaz Sharif’s warning about the Rs850 billion annual losses from SOEs highlights the urgent need for reforms in Pakistan’s public sector enterprises. If decisive action is not taken, these losses could further strain the country’s already fragile economy. With mounting circular debt and rising fiscal challenges, Pakistan faces a critical juncture where swift and effective measures are necessary to stabilize its financial future.
