A familiar chorus of privatization is echoing through the corridors of Islamabad, as Pakistan hurtles through one of the worst economic crises.
Desperate to sail through this turmoil, the government is cutting down the ministries and scheduling to sell off the state-owned enterprises like they were the only entities pulling down the country to reach its full potential. But one thing is for sure privatization is not the answer to these riddles, it’s a mirage, a temporary distraction from the deep-rooted issues tearing down the very fabric of the state.
If history has taught us anything, it’s that selling off the public sector to private interest has never really served the people. It nourishes the few and impoverishes many, leaving the state at the whims of capital and private entities. Instead of blindly cramming the old textbook of neoliberalism, the state should explore alternatives like public-private partnerships. It can harness the efficiency of the private sector without surrendering the common goods to market forces.
In the majestic halls of Washington, London, and Dubai, privatization is presented as the only sacred solution for economic reforms.
The road to recovery lies in reclaiming economic sovereignty.
More often, It is argued that by offloading the inefficient and bloated state-owned enterprises, the government can take a breath of relief as private entities inject capital and management expertise to revive these morbid enterprises. It all seems very seductive as the economic managers of Pakistan recite it very often in press conferences and talk shows but it is fundamentally flawed.
The central problem with privatization is the fact that it places profit above everything else. Private owners have no concerns about national development or public welfare. They are the champions of agency theory with maximizing the returns for the shareholders by cutting costs, reducing wages, and increasing prices for the consumers. One of the decisions by such economic gurus of the past that has aged like milk is the IPP agreements. It has not only led to non-affordable electricity for the masses but also spiraling tariffs and blackouts, while private companies rake in profits. The alternative is not to cling to a dysfunctional status quo but to rethink the role of the state in the economy. Pakistan can build a model that balances public ownership and private efficiency instead of selling off state enterprises.
Public-private partnerships (PPPs) provide a middle path, one that leverages the expertise and capital of the private sector while ensuring that public interests remain on top. Within a public-private partnership (PPP), the ownership of the enterprise remains with the government but its operations are run by private firms. This ensures that there is a motivation to be efficient, and at the same time, the government does not lose hold of vital sectors. With the right structures, it can achieve better services, more jobs, economic growth and protect the public good.
For instance, consider Malaysia where PPPs have been successfully launched in infrastructure development, education, and healthcare. The government remains a type of stakeholder so that certain national goals must not be sacrificed on the whims of profits while private companies bring the required management capacity to innovate effective solutions. Likewise, the case of public housing provision in Singapore, which has operated in partnership with the private sector, has enabled many people to access housing without the problems associated with excessive privatization.
However, the paradox is that the economic managers of Pakistan do not consider PPPs, as they are tied to an ideology of neoliberalism which is mainly short-term.
The ‘big’ institutions that impact Pakistan, such as the IMF, are not interested in the emergence of a middle ground where the state holds states holds both public and private interests. They want to promote a clear agenda of privatization, and deregulation of markets, and let the market decide the future.
That very formula has already been employed earlier resulting in the financial crises in Latin America in the 1990s, the meltdown of the public services in Eastern Europe, and the systematic obliteration of the welfare state across the Global South. What makes them think that it will be any different in Pakistan?
The solution to this economic turmoil is not to surrender the public enterprises to the highest bidder, instead, it is about instituting an economy that serves the people rather than the private sector.
Public-private partnerships, for instance, help in the advancement of state-owned enterprises while still preserving the social fabric. However, this requires a government that is committed to national development, not beholden to international financial institutions or domestic oligarchs.
It requires leadership that understands that the economy is not a marketplace, but a system that must balance efficiency with equity, and profit with public service. Pakistan’s economic crisis is real, but its solutions cannot be reduced to privatization. The road to recovery lies in reclaiming economic sovereignty, forging new partnerships that serve the public, and building an economy that works for all. It’s time to reject the false promise of privatization and chart a new path forward, one that puts people before profits.
The writer is a student.