Decisions needed about the state-owned organisations at financial risk

The country’s state-owned institutions are a major source of government revenue. But there is also a reverse picture.

The government has to provide subsidies and grants year after year to sustain manyof these loss-making state-owned enterprises.

Even the debt obligations of many organisations have to be paid from the government’s own treasury.

That is, revenue collection from loss-making institutions is less, and expenditure is more.

A recent assessment by the Finance Department found that 81 percent of the country’s state-owned institutions and organizations are at medium to very high financial risk.

This information is not just a picture of the financial distress of some enterprises; it is an issue related to the state’s financial capacity, budget management, and the macroeconomics.

As well, government subsidies and grants are essential in areas such as electricity, energy, public transport, water supply, or maintaining market stability for daily necessities.

In these sectors, social responsibility and public interest often have to be placed above commercial profit.

It is worth noting here that improving revenue management has become essential for the implementation of the government’s proposed budget of Tk 9.38 crore for the financial year 2026-27.

A huge deficit has been kept in the budget for the fiscal year. Since revenue collection is insufficient, a large part of this deficit will be met by borrowing from domestic and foreign sources.

Although loans are helpful in development activities, the pressure of paying interest and installments increases over time.

But the question is, will the losses and inefficient management of the institutions concerned be ignored and maintained for years in the name of protecting public interest?

Why is there no transformation in the financial situation of these institutions despite spending huge amounts of money from the government treasury? Even their services are not of special quality.

In many institutions, there is a culture of excessive manpower, inefficient management, and slow decision-making process.

A big example of this is the country’s public transport sector, starting with the authorities related to the electricity sector.

This situation makes it clear that these institutions are not even accountable.

Despite this, every year during budget formulation, there is a demand to increase allocations in sectors such as education, health, research, social security or infrastructure development.

But in reality, significant government resources have to be spent on sustaining loss-making institutions.

The country is at a point where there is no option but to ensure maximum utilisation of limited resources. In that reality, reform of the state-owned loss-making institutions has become urgent.

Furthermore, decisions such as public-private partnerships, management contracts, joint ventures, or expanding participation in the stock market can be considered.