THE talks between the government and the IMF are advancing as the key date of Nov 7 approaches when the first delegation to begin programme negotiations is scheduled to arrive. Already the IMF has met the railway minister to ask what plan the government has regarding the future of this key institution which is one of the largest bleeding enterprises in the country. Last year alone, the railways ate up Rs38.5bn of government money just to make up for its losses, and this year an additional Rs37bn has been budgeted for the purpose. It is not difficult to acknowledge that public transport, whether intra-city or long-distance, ought to be subsidised, but the problem with the state-owned companies goes far beyond the subsidies that they enjoy, as the example of the railways demonstrates. The persistent losses that these entities incur do not arise entirely from any public-service function that they perform. They arise in equal measure from gross mismanagement and incompetence, as well as political interference in the running of their affairs. The net result is mounting financial losses at these companies and escalating debt.
How does the government intend to fix this problem? The PTI made clear even before the election that privatisation was not part of its agenda, and the party has followed up on this since coming to power. That is perfectly fine because it is not a foregone conclusion that privatisation is the only way to improve the operations and financial health of the public-sector enterprises. But having ruled out one option, the government now needs to make clear what its path forward really is. Thus far, we have only vague, directional pointers such as the creation of a holding company and some kind of a sovereign wealth fund. Additionally, the finance minister has talked about reducing political interference. But then, we saw the appointment of a serving air marshal as the chairman of the board at PIA, which raised more questions than it answered. How is this appointment in line with the stated intention of the government to turn around state-owned entities, including PIA, without transferring management control or ownership to private parties? Perhaps the talks with the IMF will provide an opportunity to lay out a clear road map that the government intends to follow, but a few reform directions should have been apparent by now.
Published in Dawn, November 4th, 2018