According to The News, the International Monetary Fund (IMF)-mandated State-Owned Enterprises (SOEs) Act of 2023, which was intended to reform Pakistan’s unprofitable public entities, has been widely exploited by the top executives of these organizations to significantly increase their salaries and perks, draining billions from the national treasury.
Informed government sources told The News that in light of a recent report by this newspaper exposing how the chief executive of a typical SOE accumulated wealth by misusing the law, information is now being collected.
The publication’s report has raised concerns within the government, prompting a deeper investigation into the broader misuse of the legislation across multiple state-run entities. A source further explained that the top regulator of these SOEs is itself involved in benefiting its senior officials.
Sources reveal that information is being gathered to determine how the Act was “milked” for the personal gain of SOE executives, rather than being used to ensure financial discipline and improve governance.
Taking serious notice of the publication’s revelations, Prime Minister Shehbaz Sharif has already established a high-level committee to review the governance and financial practices of SOEs under the 2023 law, which was passed as part of the IMF’s conditionalities.
The committee will also assess whether the IMF itself should be approached regarding the unintended consequences of the reforms. The IMF had pushed Pakistan to pass the SOE Act 2023 with the goal of making state-owned enterprises more independent and less of a financial burden on the public.
The law was designed to promote competition, ensure transparency, strengthen management, and subject SOEs to independent audits in line with international standards to reduce fiscal risks. However, insiders claim that instead of improving efficiency and accountability, the law has been used by SOE boards and executives to grant themselves unprecedented financial privileges, even as many of these entities continue to provide poor services and remain a liability to public funds.
“SOEs were meant to be reformed to serve the public interest, but what we are seeing is the exact opposite—top bosses enriching themselves while ordinary taxpayers foot the bill,” a senior government official admitted. Pakistan has over 200 state-owned enterprises, many of which operate in critical sectors like energy, insurance, aviation, banking, and transport.
Many of them have long been plagued by inefficiency, corruption, and mismanagement, contributing to fiscal losses that, according to initial estimates, run into billions annually. The high-level committee’s findings are expected to guide the government’s next steps in tightening oversight, re-evaluating the SOEs Act 2023, and potentially renegotiating aspects of the IMF’s reform that have enabled this abuse.
