City
Epaper

Pakistan's state-owned entities are the worst in South Asia

By IANS | Updated: April 23, 2023 12:40 IST

Islamabad, April 23 Pakistans state-owned entities (SOEs) are the worst in South Asia and their combined losses growing ...

Open in App

Islamabad, April 23 Pakistans state-owned entities (SOEs) are the worst in South Asia and their combined losses growing faster than assets, resulting in a significant annual drain on scarce public resources and posing a substantial risk to the sovereign.

On an annual basis, they together swallow more than 458 billion PKR in public funds to stay afloat as their combined loans and guarantees surged to almost 10pc of GDP (5.4 trillion PKR) in FY21 from 3.1 per cent of GDP or 1.05 trillion PKR in 2016, according to the World Bank that advised a deep-rooted reform programme to reverse the trend, reports Dawn news.

They "impose a significant fiscal drain and pose a substantial financial risk on the federal government", said the World Bank, adding that these entities had been incurring losses since FY16, with annual losses averaging at 0.5 per cent of GDP over FY16–20.

"Pakistan's federal SOEs have been found to be the least profitable in the South Asia region," said the Public Expenditure Review 2023, adding that with the persistent losses, the accumulated SOE losses had become substantial, amounting to 3.1 per cent of GDP in FY20, Dawn reported.

Federal government exposure to SOEs, defined as the outstanding stock of guarantees and government loans to SOEs, has been rapidly increasing and stood at 9.7 per cent of GDP in FY21.

The report noted that combined fiscal exposure against domestic and foreign loans and guarantees had been increasing rapidly with annual growth averaging 42.9 per cent over FY2016–2021.

The report said that individual SOE performance was largely dictated by sectoral performance. Although the primary reasons for SOE losses differ, they are typically related to unresolved corporate governance issues, sector regulations, an underestimation of the cost of the provision in complete restructuring and insufficient current subsidies.

SOE losses are concentrated in the power, infrastructure, and transport sectors, and in the aggregate, outweigh profits from profitable SOEs.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

Tags: asiaislamabadWorld BankThe world bank groupImf-world bank
Open in App

Related Stories

Social ViralViral Video: Pakistan Locals Storm Fake Call Center, Loot Laptops & Other Gadgets After FIA Raid

NationalPunjab Blast: Explosion Heard at Islamabad Police Station in Amritsar

MaharashtraMaharashtra Gets Rs 1,595 Crore Loan From World Bank Ahead of CM Swearing-In Ceremony

InternationalSCO Summit 2024: As Host, We Cannot Propose Bilateral Meeting, Says Pakistan Minister Ahsan Iqbal (Watch Video)

NationalSCO Summit 2024 in Pakistan: EAM S Jaishankar to Lead Indian Delegation in Islamabad on October 15 and 16

International Realted Stories

International"President Lorenzo condemned terrorist act in J-K," says MEA Secy

InternationalAngola President Lourenco condemns Pahalgam terror attack, expresses solidarity with India in tackling cross-border terrorism

InternationalSriLankan Airlines Flight From Chennai Searched After Pahalgam Attack Tip-Off, No Suspects Found

InternationalFlight from Chennai undergoes security search in Colombo, no terror suspects found on board

InternationalPress freedom under siege: Pakistan falls to 158th in global rankings