THAT some of the country`s state-run commercial entities suffered financial losses totalling a staggering Rs1.4tr, or twice the size of the federal Public Sector Development Programme, in just two years is quite disconcerting. Yet it is not surprising, given the huge losses of several individual state-owned enterprises reported in recent months. A new ministry of finance re port , Federal Footprint State-Ow ned E nterprises, that evaluat e s the performance of 81 publicly owned and managed entities operating in various sectors during FY21 and FY22, shows that the government had accrued a net loss of Rs400bn as the total losses incurred by 25-30 entities outstripped the combined profits of Rsitr made by the rest of them. The report is released to meet a performance benchmark of the ongoing $3bn IMF programme, and highlights deteriorating financial management and operational efficiency in the public sector. The National Highway Authority, which tops the list of loss-making entities for both years, has accrued a loss of Rs422bn, almost equivalent to the civil government`s annual expenditure during two years.

Strangely, the ministry attempts to justify the existence of these loss-makers on the pretext that they contribute significantly to the national economy through corporate taxes, dividends, and employment. This is in spite of the fact that the SOEs have accumulated losses of Rs2.5tr. PIA alone has accumulated financial losses of more than Rs600bn. The airline`s debt and liabilities have also surged to more than Rs350bn despite multiple bailouts. The IMF and other multilateral lenders have frequently underscored that these resourceguzzlers have become a major source of systemic risk for government budgets and the financial sector. While it was easier to bankroll these loss-makers in the past with borrowed money, the cash-strapped state can no longer afford to keep throwing money into these black holes in the hope of turning them around. Most SOEs, including several profit-making companies, will have to be wound up not only to save taxpayers` money, but also to improve the business environment for attracting private investment. Only those SOEs that have strategic importance or where the private sector is unwilling to invest should be kept and that too after restructuring them.