PM rejects Roadmap for PIA restructuring

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PM rejects Roadmap for PIA restructuring
Lahore (November 10, 2011) – yousuf-raza-gilaniPrime Minister for restructuring its administrative and financial management.
The Business Recorder fully supports this approach though it considers it prudent to express reservations about the likelihood of implementation of this commendable strategy for two major reasons.
First and foremost the incumbent government has been repeatedly made aware of the need to restructure state-owned entities (SOEs) in an effort to improve efficiency and thereby reduce the need to extend large bailout packages estimated at over 300 billion rupees per annum.
The then Finance Minister, Shaukat Tarin, prior to his resignation reportedly submitted a restructuring plan for state-owned entities to the cabinet with the overarching objective of reducing the budget deficit, which would have had positive implications for macroeconomic stability.
The plan focused on appointing senior management on merit, ensuring that the SOEs are not used as recruitment bureau and appointing qualified, dedicated and honest individuals as members of the boards of directors.
That none of these suggestions were implemented in letter or in spirit accounts for the inexorable financial and administrative collapse of an increasing number of SOEs leading to their requests for ever-increasing bailout packages.
Pakistan Steel, Pakistan Railways which required a one billion rupee government bailout from the government’s cash-strapped treasury recently to enable it to pay salaries and pensions of its employees, and the most recent PIA request for a bailout are all symptomatic of a deep malaise that besets our SOEs, a malaise that can be effectively dealt with if a restructuring roadmap is implemented.
It is pertinent to reiterate at this point that a restructuring plan is available with the government and therefore the Prime Minister’s statement that a clear roadmap is a prerequisite for a bailout package can quite easily be fulfilled.
The issue however would remain one of implementation and one would only hope that the Prime Minister requests for a time-bound action plan that links assistance to meeting specific conditions – a strategy reminiscent of assistance extended by multilaterals.
Secondly and equally pertinently, it is to note that the incumbent government must accept blame for part of the financial difficulties that plague the national airline today.
The government proudly passed the Sacked Employees Reinstatement Bill 2010 in October last year which specified that those appointed in corporations or autonomous or semi-autonomous corporations or in government service from November 1, 1993 to November 1, 1996 and who were removed, dismissed or terminated from service forcibly would be provided relief.
For the cash-starved PIA this implied reinstatement of those who were let go as part of downsizing PIA from the date of termination/dismissal and giving them back pay as well.
The PPP in government has always supported a policy which seeks to provide employment to its supporters, and the easiest way is to recruit in SOEs.
Benazir Bhutto is on record as having stated that she does not regret providing employment to thousands of people in SOEs.
However, with the benefit of hindsight it is evident that part of the rot in SOEs is attributable to overstaffing and accounts for a lose-lose situation, whereby large annual bailout packages, necessitated by financially indefensible recruitment decisions in SOEs have resulted in unsustainable budget deficits with obvious repercussions on inflation, the impact of which is felt by all.
(Published in “Business Recorder”)

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