By S.M. Inam
The latest figures from Pakistan’s federal finance ministry make for sobering reading. Fifteen state-owned enterprises accumulated combined losses of Rs833bn in a single year, with the National Highway Authority topping the list. The scale of the deficit is not an accounting curiosity. It is a fiscal alarm bell, echoing through a budget already stretched by debt servicing, defence outlays and the social costs of inflation. These losses do not disappear into spreadsheets. They are absorbed by the national exchequer and, in the end, by taxpayers navigating stagnant wages and rising prices.
Pakistan has wrestled with the inefficiencies of public sector entities for decades. Yet the persistence, and indeed expansion, of these losses suggests something more entrenched than routine bureaucratic sluggishness. These enterprises were conceived as instruments of national development: to build infrastructure, provide essential services and anchor strategic industries. Instead, many have come to symbolize opaque governance, political interference and a troubling absence of professional stewardship.
The question is not simply how the numbers became so large, but how they were allowed to accumulate with so little visible consequence. When balance sheets were bleeding billions, where were the boards mandated to provide oversight? Were senior executives subjected to rigorous performance reviews grounded in transparent benchmarks? Or were mounting deficits treated as an unfortunate but tolerable feature of public ownership? The answers matter, because they go to the heart of institutional accountability.
An uncomfortable pattern recurs across Pakistan’s state apparatus. Financial deterioration at the top rarely translates into proportional scrutiny for those directing strategy. Even as enterprises slipped deeper into the red, senior management in several cases continued to receive substantial remuneration packages, official vehicles, housing and a suite of ancillary privileges. Incentives were seldom recalibrated to reflect performance. Contracts were rarely revisited with urgency. In practice, responsibility appeared diffused — or deferred.
This asymmetry corrodes public trust. Lower-tier officials often face swift disciplinary action for procedural lapses, while those shaping policy direction and organizational culture remain comparatively insulated. The perception, and sometimes the reality, of selective accountability deepens cynicism about governance itself. When citizens are asked to tighten their belts in the name of fiscal consolidation, they are entitled to expect similar discipline at the apex of state-owned institutions.
The structural drivers of the crisis are hardly obscure. Political appointments and non-meritocratic recruitment have eroded institutional capacity. Boards are too often populated on the basis of patronage rather than sectoral expertise. Commercial mandates are blurred by directives that serve short-term political interests. Procurement processes, vulnerable to opacity, become fertile ground for inefficiency or worse. The predictable result is financial decay.
Yet the cost does not remain confined within the walls of these entities. When the government props up loss-making enterprises through borrowing or subsidies, the fiscal deficit expands. That expansion carries macroeconomic consequences: upward pressure on inflation, heavier taxation and constrained development spending. Funds that could be allocated to health, education or climate resilience are instead diverted to plug recurring corporate shortfalls. Citizens pay twice — first through diminished public services, and again through the instability generated by widening deficits.
The debate that follows such revelations often collapses into a binary choice: wholesale privatization or stubborn defence of the status quo. Both positions oversimplify a complex challenge. Ownership, while important, is only one dimension of reform. A poorly governed public enterprise will not automatically become efficient under private stewardship if regulatory oversight is weak. Conversely, a publicly owned entity can deliver value if it operates within a framework of professional management, transparent auditing and clearly defined commercial objectives.
What is required is a systemic recalibration of governance norms. Independent audits must be timely and genuinely independent. Board appointments should be tied to demonstrable expertise and subject to fixed tenures insulated from political cycles. Performance contracts for senior management should be explicit, measurable and enforceable. Remuneration structures must align with outcomes, not entitlements. Above all, losses must trigger consequence at the strategic level, not merely administrative reshuffling.
There is also a need for clarity of purpose. Some public enterprises serve strategic or social functions that cannot be assessed solely through profit and loss statements. Infrastructure agencies, for example, may pursue projects with long gestation periods and diffuse economic benefits. But even in such cases, financial discipline and transparency remain non-negotiable. Subsidies, if justified, should be explicit and budgeted, not disguised within opaque accounts.
(The writer is a former government officer and a senior analyst on national and international affairs, can be reached at inam@metro-morning.com)
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