The chaotic pursuit of privatisation of SOEs
Last week, Finance Minister Muhammad Aurangzeb reported “very good progress” on privatising loss-making Pakistan International Airlines (PIA) and outsourcing three airports. Meanwhile, the Privatisation Commission of Pakistan is reportedly busy devising a new three-phase strategy to privatise state-owned entities (SOEs), barring those considered of national or strategic importance. The current privatisation list focuses on loss-making public enterprises and prioritises entities like PIA and power distribution companies to reduce the government’s involvement and haemorrhage of taxpayers’ money. The massive annual losses of Rs500 billion incurred by the SOEs, which form a part of growing public expenditure, have become a major drag on the national budget, with their accumulated losses topping Rs2.5 trillion or nearly $9bn. Moreover, the financial burden of these resource-guzzlers, apart from haemorrhaging government budgets, has also become a source of systemic risk for the financial sector.