ISLAMABAD: Prominent international governance risk expert, Muhammad Ghazali Aqeeq, has stressed that Pakistan is confronting significant economic challenges due to the financial performance of state-owned enterprises (SOEs).
In the fiscal year 2024-2025, these entities reported a staggering combined loss of Rs 851 billion—a figure that, while reflecting a 14.03% decrease from the previous year, underscores the urgent need for effective management practices, he added.
Therefore, the implementation of Enterprise Risk Management (ERM) and Internal Audit Management has become essential for Pakistan.
Aqeeq maintained that the recent report from the Ministry of Finance highlights the precarious financial situation of SOEs in Pakistan. The net loss of Rs 851 billion represents a significant burden on the national economy – reflecting ongoing issues such as mismanagement, operational inefficiencies and poor governance. While, the decrease in losses is a positive sign, the persistent financial challenges reveal the necessity for systemic reforms, he added.
In light of these circumstances, the International Monetary Fund (IMF) has strongly advocated the adoption of ERM and Internal Audit Management frameworks within SOEs of Pakistan. These practices are not merely recommendations: they are essential for ensuring accountability, transparency and operational efficiency.
Muhammad Ghazali Aqeeq, who is also the founder of Transvare Corporation, explained that the implementation of ERM allows SOEs to adopt a proactive approach to risk management – systematically identifying and mitigating potential risks that could impact financial performance. By embedding risk management into their operations, SOEs can better safeguard public resources and enhance their resilience against economic shocks.
Internal Audit Management plays a complementary role by providing independent assessments of the effectiveness of risk management practices and internal controls. This oversight ensures that financial operations are conducted transparently and that any irregularities are promptly addressed. Together, these frameworks create a robust governance structure that is crucial for restoring public trust in SOEs.
By aligning with international best practices, Pakistan can enhance its appeal to investors and stakeholders – promoting economic stability and growth, he added.
Ghazali Aqeeq elaborated that in an increasingly complex financial landscape, the need for digitally transformed ERM and Internal Audit Management tools is more pressing than ever – especially for SOEs while we are operating under IMF programs. Digital solutions offer a myriad of benefits that can significantly enhance the effectiveness of risk management and auditing processes.
Muhammad Ghazali Aqeeq highlighted that, as Pakistan grapples with the financial challenges posed by its state-owned enterprises, the implementation of Enterprise Risk Management and Internal Audit Management is not just beneficial—it is indispensable. With a reported loss of Rs 851 billion in the fiscal year 2024-2025, the need for effective governance and accountability within SOEs has never been more urgent.
By adopting robust ERM frameworks and leveraging digitally transformed tools, Pakistan’s SOEs can enhance their operational efficiency, combat financial misuse and ultimately contribute to the country’s economic recovery.
Copyright Business Recorder, 2025
