Evaluating the Financial Sustainability of Pakistan Post Office Using a Machine Learning Approach: Implications for Sustainable Development Goals

Abstract

Financial sustainability has become a critical challenge for public sector service institutions and State-Owned enterprises (SOEs), particularly in sectors experiencing structural transformation due to technological change and increasing market competition. This study evaluates the financial sustainability of the Pakistan Post Office by employing a data-driven analytical framework that integrates composite sustainability indices and econometric modeling. The analysis is based on twenty years of annual data and utilizes key financial performance indicators, including Return on Assets (ROA), Return on Equity (ROE), Net Profit Margin (NPM), and Fixed Asset Turnover (FAT). These indicators are normalized using the Min–Max technique and aggregated to construct three composite indices: the Financial Sustainability Index (FSI), the Financial Vulnerability Index (FVI), and the Operational Efficiency Index (OEI). These indices are further combined to develop an Aggregate Financial Sustainability Index (AFSyI), which provides a comprehensive measure of the overall financial sustainability of Pakistan Post Office.
To examine the determinants of financial sustainability, an Ordinary Least Squares (OLS) regression model is implemented within a Python-based computational environment using fiscal policy variables such as revenue, expenditure, fiscal deficit, and interest rates as explanatory factors. The empirical results indicate that financial sustainability in the postal sector has remained moderate but unstable over the study period. Government expenditure and fiscal deficit demonstrate statistically significant positive relationships with financial sustainability, while interest rates do not exhibit a significant influence. The findings suggest that fiscal policy conditions and government financial support play an important role in sustaining the operations of public postal institutions.
The study further highlights that strengthening the financial sustainability of Pakistan Post is crucial, as its declining performance mirrors the broader challenges faced by State-Owned Enterprises (SOEs) in Pakistan. Institutional economics suggests that economic outcomes are shaped by governance, laws, and social norms, and that public institutions can improve efficiency and sustainability through effective management. Enhancing operational efficiency, institutional effectiveness, and financial management in Pakistan Post can support SDGs 5, 8, and 9 by promoting financial inclusion, employment, economic activity, and robust logistics and communication infrastructure. These findings provide empirical evidence to guide policy reforms aimed at modernizing postal institutions and strengthening their role in sustainable economic development