In a recent report by the IMF, Pakistan is ranked 52nd among the world’s 100 poorest countries, while Bangladesh and India are ranked 62nd and 63rd, respectively. Pakistan’s position is 161st in terms of per capita income and 138th in terms of GDP. Our neighbouring countries have surpassed Pakistan in the race to eradicate poverty, primarily due to political instability, conflict, and limited infrastructure within Pakistan. However, the most significant reason for this is the debt accumulated during various governmental periods. Pakistan’s internal and external debts and liabilities have exceeded 77,660 billion rupees. Over 50% of the country’s annual income is spent on repaying these debts, and the economy continues to deteriorate. Pakistan’s per capita debt rose from $823 in 2011 to $1,122 in 2023, marking a 36% increase in twelve years.
Recently, the details of loans acquired by successive Pakistani governments from the IMF were presented to the National Assembly’s Standing Committee. From 2008 to 2013, loans exceeding $5.23 billion were taken, with over $3 billion repaid to the IMF. The Pakistan People’s Party paid more than $484 million in interest to the IMF during this period. From 2013 to 2018, the Pakistan Muslim League-Nawaz (PML-N) government took loans amounting to $4.39 billion, repaying over $5.92 billion, and paying $3.177 billion in interest. From 2018 to 2022, the Pakistan Tehreek-e-Insaf (PTI) government secured around $6 billion in loans from the IMF, repaying $4.02 billion and paying $791.1 million in interest.
If the government genuinely seeks to improve the conditions in Pakistan, it should rely on its own resources instead of acquiring new loans. The deficit in the energy sector alone has exceeded 5,000 billion rupees. Two-thirds of government institutions, including railways, steel mills, and Pakistan International Airlines (PIA), are operating at a loss, while the bureaucracy in these loss-making institutions continues to enjoy perks worth billions of rupees. The federal government is spending 800 billion rupees on pensions alone. If the Prime Minister truly wants to lift the country out of crisis, it is essential to free the economy from these blood-sucking institutions and the burdensome bureaucracy.
The total losses of these institutions have exceeded 500 billion rupees this year, according to the Ministry of Finance. Pakistan Railways, the National Highway Authority, Pakistan International Airlines, Pakistan Steel Mills, and power generation companies are among the top institutions suffering from billions of rupees in losses. To keep them operational, the government must allocate billions of rupees from the national treasury every year. For instance, Pakistan Steel Mills, which has been closed since 2015, had total debt and losses amounting to 526 billion rupees by July 2023. Meanwhile, PIA continues to employ around 7,000 officers, who drain the institution through excessive salaries and benefits. In leading global airlines, the ratio of employees to aircraft is typically between 200 to 220, whereas in PIA, this ratio exceeds 500 employees per aircraft.
These institutions have been plagued by politically motivated recruitments in every regime, and their governance models have not improved over time. There is no accountability or oversight in any institution. These entities can be restored without privatisation, but this requires ending political recruitments and appointing qualified and capable individuals to leadership positions. The government must reorganise the boards of directors, implement professional management, and employ trained manpower while restoring the confidence of the business community to attract investors. Currently, out of 212 State-Owned Enterprises (SOEs) across various sectors, 197 are operating at a loss. In 2016, the losses of these institutions accounted for 0.5% of the country’s GDP, which has increased to 4% of GDP by 2021. About 450,000 people are employed in these loss-making institutions, costing the national exchequer 5 billion rupees annually in salaries and benefits.
The energy sector, particularly the subsidiaries of WAPDA, poses a significant threat to the country’s economy, with circular debt in the power sector reaching 2,500 billion rupees, resulting in continuous increases in electricity prices. Chief Executives in these institutions should be appointed based on merit, transparency, and experience to revive these loss-making entities through new investments and better management, particularly in the power sector, airlines, steel mills, and railways. Unfortunately, the government seems inclined towards privatisation to conceal its failures, which could result in mass unemployment. Economic experts need to find alternative solutions to secure employment for those associated with these government institutions.
Certainly, the economic stability of any country depends on political stability. Instead of using political parties as scapegoats, their legitimate concerns should be addressed. With 100 million people out of a population of 250 million living below the poverty line, it is imperative that everyone works together to solve the pressing issues faced by the people.
Muhammad Imranul Haq
The writer is a Deputy Secretary Information of Jamaat-e-Islami Punjab and Chairman D Nine Media Forum Pakistan.