Pakistan can enjoy sustainable growth

The deep fiscal issues and inefficiencies within Pakistan’s state-owned enterprises (SOEs) paint a worrying picture of the scale of losses, the burden on taxpayers, and the fiscal stability of the nation. The fact that these enterprises continue to operate with mounting debts and losses, especially in critical sectors like power, infrastructure, and transportation demonstrates the need for urgent reform. The reports underscore the tremendous drain on public finances due to subsidies, grants, and loans that are being used to keep these loss-making entities afloat. The accumulated losses, which total a staggering Rs5.75 trillion suggest systemic mismanagement, inefficiencies, and perhaps corruption. The allocation of Rs1.59 trillion in government support to SOEs is significant, especially when compared to the federal development budget, showing how deeply these enterprises are embedded in the economic system, draining resources that could otherwise be invested in development and services. Despite these issues, the government’s inability to effectively privatize or restructure these enterprises has created a situation where entrenched political and bureaucratic interests maintain the status quo. This perpetuates the cycle of waste and inefficiency, benefiting a select few while burdening the public. Ultimately, the inference is clear: without bold actions such as liquidation, privatization, or serious restructuring, these SOEs will continue to drain resources. The pressure from multilateral lenders and the need for fiscal stabilization may push the government into making these difficult but necessary decisions. Time is running out for these entities to be fixed or phased out in a way that benefits the broader economy. The situation reflects a profound crisis in Pakistan’s economy, which is being driven by unsustainable borrowing and a lack of serious reform implementation. The Finance Minister’s statement about the country’s loss of credibility is an honest acknowledgment of the economic challenges Pakistan faces. The ongoing reliance on external loans, combined with the government’s failure to implement long-term structural reforms, has left the economy in a precarious state. This cycle of borrowing is not just a financial issue but also one that affects Pakistan’s standing on the global stage. The mention of state-owned enterprises (SOEs) and their heavy losses, especially in sectors like power and infrastructure, is also a critical point. These SOEs not only drain the national budget but also undermine the fiscal health of the country. As you pointed out, the government’s attempts to address these losses whether through subsidies, grants, or even a change in tax policy are, at best, temporary measures. The lack of governance reforms within these organizations, especially the presence of non-independent directors, further exacerbates the issue. The proposed shift in tax policy, which places more control on the Ministry of Finance while leaving the Federal Board of Revenue (FBR) to focus on collection, could bring some efficiency, but it also highlights the complexity of the situation. The finance minister’s announcement to address the structural governance issues, such as improving audit standards, is also an important step toward long-term sustainability. Our comparison to Indonesia shows despite facing political instability and economic turmoil; it managed to pull itself out of these crises with strong leadership and a focus on good governance. Pakistan has the potential to do the same, but it will require overcoming significant challenges such as corruption, political expediency, and a lack of real accountability. The situation calls for urgent, sincere reform across all sectors, not just to stabilize the economy but also to restore trust with international lenders and investors. Pakistan has the necessary resources and human capital to achieve this, but the country must first prioritize long-term reforms over short-term fixes. The journey ahead will be difficult, but with a commitment to governance, accountability, and strategic planning, Pakistan could eventually find its path toward sustainable growth.