EDITORIAL: One need only look at the books of Pakistan Railways to understand why it is in such a financial mess. As Law Minister Azam Nazir Tarar enlightened the upper house the other day, a good 67 percent of the railways budget goes to salaries and pensions of employees, about 23 percent is spent on running the actual trains, and a meagre 3-4 percent is left for repair and maintenance.

This is one of those classic cases where even a lot-grade private sector manager could tell with his/her eyes closed how turning over an enterprise to a government completely skews the employee-asset ratio and diverts revenue towards non-productive avenues.

But this argument, complete with facts and asset-liability ratios, is as old as time in this country. Yet PSEs (public sector enterprises) like the railways continue to bleed the exchequer of trillions of rupees every year.

No doubt the government was presented a similar report last year, and the year before that; just like it will be presented one next year as well. The big question, especially now, is what are we going to do about it since there is neither time nor any fiscal space left and IMF is demanding quick privatisation of these sick enterprises as part of the structural adjustment that will have to accompany its bailouts?

Practically, the railways dilemma is not impossible to solve. All you need to do initially is cut excess staff and route more money towards running and maintaining trains. But politically it’s a different type of headache altogether.

For, one of the gifts our particular brand of democracy has given us, going back to the so-called decade of democracy (1990s), is political loyalists and appointees of ruling parties being stuffed into public enterprises in return for their loyalty on the campaign trail.

So, electables that shower money for candidates are later showered with government jobs for their own henchmen, etc., and so this cycle has gone on for decades. To the point that now we must pay more for these appointees than the hardware, just like trains, that these departments run on.

This is another one of those times, then, that the present administration must be reminded of its promise when it gladly chose to form government after a very controversial election – that it would have the foresight and, more importantly, political will to take the tough decisions necessary to keep the economy alive. It made the right noise at the time, but now it’s time for the proof of the pudding.

Will the government cut all the dead weight in PSEs, especially really bad cases like railways, and at least try to turn things around for privatisation? Or will it simply kick the can further down the road, blaming everybody else but itself – the usual reaction to every bad news in Pakistani politics – and let the rot go even deeper?

It does not have very long to decide. Especially with a new IMF programme needed as soon as possible, and PSEs already part of the discussion.

Copyright Business Recorder, 2024