Saturday December 04, 2021

Debt of state-owned firms falls 2pc to Rs1.45trln

November 26, 2021
Debt of state-owned firms falls 2pc to Rs1.45trln

KARACHI: Debt owed by public sector enterprises (PSEs) inched down 2 percent to Rs1.45 trillion in the first quarter of current fiscal year, latest figures published by the central bank showed on Thursday.

Their debt stood at 2.7 percent of gross domestic product. The debt of the PSEs was Rs1.48 trillion till the end of September 2020.

The State Bank of Pakistan’s data revealed that outstanding collective debt and liabilities of the state-owned enterprises (SOEs) also fell by 0.9 percent to Rs1.67 trillion in July-September quarter of FY2022.

The debt of the various loss-making SOEs stood at Rs1.165 trillion at the end of September 2021, compared with Rs1.219 trillion in the same period of the last fiscal year.

Among the major PSEs, the highest level of debt was accumulated by the national flight carrier -- Pakistan International Airlines (PIA), with Rs156.4 billion, followed by Water and Power Development Authority (WAPDA) with Rs76.6 billion.

The outstanding debt of Oil and Gas Development Corporation (OGDC) stood a meager Rs6.3 billion. The debt of Pakistan Steel Mills Corporation remained flat at Rs43.2 billion.

Analysts said the loss-making state-owned firms are increasing the debt burden of the government. Pakistan’s total debt and liabilities climbed to the record Rs50.5 trillion at the end of September 2021 from Rs44.8 trillion a year ago.

The government takes foreign and domestic loans to meet the expenses as it is struggling to increase revenues to reduce the debt burden with narrowing the budget deficit.

Prime Minister Imran Khan has also termed the increasing debt as a “national security issue”.

The process of the privatization of the selected SOEs remained slow due to the impact of the Covid-19. However, the IMF says the privatisation and restructuring of the loss-making entities are essential to get the Fund money and plug budget holes.

The IMF, in a recent statement, said, Pakistan needs to improve the governance, transparency, and efficiency of the state-owned enterprise (SOE) sector.

“Putting Pakistan’s public finances on a sustainable path -- while leveling the playing field of firms across the economy and improving the provision of services—requires creation of a modern legal framework, better sectoral oversight by the state, supported by regular audits, especially of the largest SOEs and reduction of the footprint of the state in the economy.”