Pakistan Policy Note 4 - Reforming State‑owned Enterprises

State-owned enterprises are a sizable element in Pakistan’s economic landscape—more than 100 of them operate in a wide range of economic sectors, contributing around 10 percent of GDP and representing about
a third of stock market capitalization. But many are marred by weak corporate governance, cost-ineffective service delivery, and considerable financial losses. This note highlights the negative implications of large
state-owned enterprises and suggests that they are a burden to already strained fiscal resources, deliver poor services, and create market distortions—all of which hold back economic growth and private sector
development. Emphasizing the urgency of state-owned enterprise reforms, the note’s policy recommendations propose measures (including commercializing state enterprise) to curtail fiscal costs, professionalize the role
of the government as owner, and improve corporate governance and accountability in state enterprises.