Turning around fortunes

The Asian Development Bank is set to give its approval to a $300-million loan, aimed at reforming public-sector enterprises (PSE) that have caused fiscal deficits and wastage of taxpayers’ money over the years with little or no improvement in performance. Pakistan Railways, which will be at the centre of the loan package, is required to undertake six policy actions, including retrenchment — or cutting down — of its workforce. The size of the loan has been doubled from $150 million at Pakistan’s request, in another sign that our money managers are happy in being trapped in a vicious cycle of loans and repayments. This loan package will require some tough decisions to be taken on reforming railways, improving its day-to-day affairs while submitting the workforce to a rationalisation plan — in other words, looking for ways to control expenditures and increase revenue.

There is no doubt that our PSEs have room for improvement, some more than others. While there are strategic compulsions involved in the government continuing to own some PSEs, there are a few of these entities that have proved to be huge burdens on the national exchequer. The railways, in contrast, has been one of those entities that have tried making improvements. But conflicts over its land assets, deep-rooted structural issues, poor service and outdated infrastructure have meant that it has only been able to go so far in achieving its targeted turnaround. The railways has a vast market that it can take advantage of. A huge rural population and an inability to afford air travel give it a strategic advantage. So why has it remained a loss-incurring entity? The reason is simple — it hasn’t operated like a business should, but as an outdated government department that lacks vision and an understanding on how to improve service quality. Coupled with lack of investments, this has led to further deterioration. One hopes that this loan package will help in turning the railways’ fortunes around and that the government does a better job negotiating the retrenchment plan with the employees than it did in PIA’s case.

Published in The Express Tribune, May 23^rd, 2016.

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