EDITORIAL: That successive governments have failed to complete much-needed reforms in a meaningful manner is a grim reality.
In other words, no reform has ever been allowed to take roots. There are, therefore, some serious doubts on the will, capability, and capacity of state institutions, including the incumbent government, to implement reforms in an appropriate or effective manner.
This is evident from the ‘one step forward, two steps back’ movement or approach to the declared commitment on the privatisation or corporatisation of bleeding state-owned entities (SOEs).
It was only in recent weeks that front pages of national newspapers were full of stories about the abysmal state of affairs in the SOEs, underscoring the pressing need for their privatisation or sell-off without any further loss of time.
A few days later, however, the newspapers carried reports about cancellation of provincialisation of Discos, annulment of the bidding process of Pakistan Steel Mills, and grounding of PIA flights.
It seems that an environment of utter confusion prevails in the power corridors and nothing is in flow, giving birth to a wild speculation that the government’s SOE reform plan has suddenly disappeared in a way that is mysterious.
The fact that political and economic uncertainties have shattered the confidence of stakeholders in efforts aimed at achieving economic revival cannot be overemphasised.
It is interesting to note that one fine day someone in the state apparatus comes up with an idea and everything starts working towards it. And then there is a change of heart due to some indigenous or exogenous reasons, or merely on the whims of someone at the top, and the whole system starts moving in other direction. You don’t introduce or implement reforms in a casual fashion.
At first, discussions on PIA did not involve privatisation and then it was decided that privatisation is on the cards – but nobody knows how it would be done. Meanwhile, the airline is sinking into the quicksand of the fiscal prolificacy-mismanagement sin, and flight operations are being compromised due to poor financial health and other reasons.
The latest news is that the company has cancelled a large number of flights — both domestic and international — due to fuel shortage. The story of Pakistan Steel Mills, another major beleaguered SOE, is no different either. There is nothing rhythmic in the process, so to speak.
The whole process of privatisation started with some euphoria under the SIFC (Special Investment Facilitation Council). However, the process could not attract requisite number of prospective buyers and a decision to scrap the process has been taken.
The company was profitable in 2006 when its privatisation was blocked by the Supreme Court led by the then Chief Justice of Pakistan Justice Iftikhar Mohammad Chaudhry, and thereafter, the company has kept on incurring losses.
In 2015, its operations came to a grinding halt. But it is still a huge burden on the national exchequer. In the case of Discos, there was a decision of privatisation and provincialisation. And now the option being proposed is to hand their operations over to private sector on long-term concessions while keeping the companies’ ownership with the federal government.
God alone knows how long the government will stick to this option. Some believe that the country can correct its course of macroeconomic imbalance and infirmity by cracking down on smuggling and instilling fear among people against the buying and trading of foreign currency in the open market while the official market has long queues of legitimate payments.
The currency started registering a-rupee-a-day appreciation against the USD like a clock. And, speculative exporters jumped on the bandwagon and perhaps started shorting dollars, brazenly compelling the SBP (State Bank of Pakistan) to address this in the forward market to reverse the trend.
It increasingly appears that we are still operating in a reactive mode without coherence as our intentions, however pious and sincere, are hamstrung by the absence of a firm resolve to address fundamental ills.
In a nutshell, the dilly-dallying in vogue only serves to prolong the agony. Needless to say, there is no escape from the much-needed reforms. Governments can fool some people some of the time, but in the end, the chickens come home to roost.
Copyright Business Recorder, 2023
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