One of the major reasons for imminent collapse of Pakistan’s economy is senseless injection of liquidity into public sector corporations who suddenly started posting huge losses after the installation of the present government. This remarkable “turnaround” is rather mysterious. It is not so mysterious if a dispassionate analysis is undertaken with a non-political angle. These corporations including PIA, PSM etc have suffered due to the “doctrine of cronyism”, a hallmark of the governance of ruling party. This doctrine affected the economy every time the party came to power. According to a conservative estimate, the government in one year alone has injected liquidity close of half of its revenue receipts to keep these corporations afloat, and cronies happy.
In order to overcome its economic problems, the government was forced the other day to impose RGST and flood tax which can have severe political consequences for the ruling party. But oblivious to the ramification of its style of economic management, it is still considering injecting liquidity into the loss making corporations. It is like putting the blood of poor taxpayers into the veins of these corporations. Express Tribune has reported that the ailing state carrier Pakistan International Airlines (PIA) is asking the government, saddled with its own mounting debt, to write off losses of 1.7 billion dollars to save it from looming bankruptcy.
In a five-year survival plan submitted to the government, PIA has promised to make cutbacks and better its fleet in a bid to improve its fortunes, if the treasury agrees to cancel its debt and pay off other creditors. Blaming “bad policies of the past” for accumulated losses of 80 billion rupees (936 million dollars) and liabilities of 144 billion rupees, PIA insisted the airline is capable of future success.
The burden would be a massive undertaking for a government dependent on US aid to survive. A economic financial adviser to the government, Ashfaq Hassan Khan, said privatization was the only long term solution for the airline, which has failed to turn a net profit since 2004 according to its last annual report.
PIA was created out of private airline Orient Airways in 1955, just eight years after Pakistan came into existence, and today has a fleet of 40 planes, a combination of Boeing 747s, 777s, 737s, Airbuses and ATR aircraft. Performing well until the 1970s when corruption and overstaffing hit company fortunes, PIA’s reputation was further battered in the 1980s as it failed to maintain its fleet, said economic expert Shahidur Rehman.
He said 1990 signaled further defeat for PIA, when legislation liberalized to allow more competition in the flight market. The state carrier remains the largest operator on Pakistan’s international and domestic routes. But union officials say years of corruption, nepotism, bad management and poor planning have pushed the corporation to its lowest ebb.