KARACHI: Loss-making public-sector enterprises (PSEs) accumulated another Rs168.5 billion in debt during 2016.
The State Bank of Pakistan’s (SBP) Statistical Bulletin for March 2017 reveals that the debt of PSEs last year increased 36.7 per cent, much higher than the increase recorded in previous years. It grew 6.6pc in 2015.
The government has been accumulating debt to meet its expenses despite facing a widening fiscal gap. During the first half of 2016-17, the rise in fiscal deficit was almost double the increase noted in the same period a year ago.
According to the SBP bulletin, it was Rs628bn at the end of December 2016 against Rs459bn a year ago, an increase of Rs168.5bn.
The present government has failed to privatise the loss-making PSEs. Instead, it has been trying to sell stakes in PSEs like OGDC that are making huge profits.
Details showed the collective debt and liability of PSEs increased 25pc to Rs833bn in 2016 compared to just 4.2pc growth noted a year ago. The government is under pressure for increasing domestic debt servicing as it continues to pay mostly interest while rescheduling the principal. PSEs are adding to overall debt servicing.
The SBP’s report identified PIA for having the biggest amount of debt that rose to Rs103.2bn. The quality and standard of PIA remain abysmal, but no steps are taken to improve its situation.
Pakistan Steel, which was a profit-making entity in 2007, started losing ground with the PPP coming to power in 2008. Now its debt has risen to Rs43.2bn. The government failed to privatise Pakistan Steel while the Sindh government politicised the issue by offering to purchase the entity. However, the Sindh government neither bought it nor allowed the federal government to sell it to another party.
Recently, the federal government indicated that the land around Pakistan Steel would be utilised for setting up an industrial estate under the China-Pakistan Economic Corridor (CPEC). The Sindh government has already raised objections to the proposal.
Water and Power Development Authority (Wapda) recorded the highest increase in its debt, which jumped to Rs62bn at the end of December while it was just Rs14.4bn a year ago. During this period, oil prices remained historically low while electricity prices increased many times.