Privatising PIA
REPORTS that the lossmaking national flag carrier PIA has grounded 11 aircraft, or a third of its fleet, over the last two to three years is not surprising. The dearth of funds to procure spare parts to keep them operational is mainly responsible for this state of affairs. Last year, the airline was planning to purchase three wide-bodied planes to launch long-haul flights. To where? Now the PIA management is apparently trying to blame higher global oil prices and a weakening exchange rate for its financial crisis rather than admitting the real reason that has brought the company down. Spending on PIA is like burning cash. With its international flight operations curtailed significantly over safety concerns and new private airlines giving it a tough time on domestic routes, the airline, which is burdened with massive debt and other financial liabilities, has no future at the moment. The government is also not in a position to inject liquidity into the company or give sovereign guarantees to lenders on its behalf due to its commitments to the IMF. Also, what is the point in investing in a company that the authorities have put on the privatisation list?
As was widely anticipated, some employee pressure groups have already begun raising their voice against the planned privatisation of the airline to protect their interests. Some may be planning active protests soon. The authorities have capitulated more than once to such pressure that is hindering their revival and privatisation plans. The country no longer has the option to surrender to the opponents of privatisation this time around. Those who are against the new government plans concerning the national carrier must be made to see why their demands are not feasible. The worsening financial conditions of the bankrupt airline means the government must speed up the process of selling it — or liquidating it if it doesn’t find a buyer — to avoid further losses to taxpayers.
Published in Dawn, August 24th, 2023
Weakening rupee
THE rupee is yet again facing renewed pressure due to multiple factors. These include a resurging current account deficit on account of rising imports and slumping exports and remittances; price inflation; shrinking foreign currency reserves amidst reduced capital inflows; and so on. The home currency continued to extend its losses yesterday, hitting new record lows of Rs299.64 to a dollar in the interbank market, which has been struggling to catch up with the open market dollar price to meet the IMF goal of reducing the gap between the two rates to less than 1.25pc. The ‘notional’ dollar price being quoted in the open market was 309 and 312 for buying and selling, respectively. The sellers were, nonetheless, reportedly demanding a significantly large premium of up to Rs10 per dollar, over and above this rate, from customers, indicating the resurgence of the ‘grey market’.
The rupee has weakened by almost 25pc since 2023 began, and 4.55pc in the current fiscal year beginning July 1, after a brief period of stability following the IMF’s approval of a new loan of $3bn to support Pakistan’s worsening external account position, and help the country avert imminent default on foreign debt obligations. Analysts had warned at that time that the ‘respite’ was temporary and that it was only a matter of time before volatility would return to the country’s foreign exchange market unless additional official bilateral and multilateral inflows started to trickle in — soon. Many argue that the rupee’s decline has been triggered by a surge in the demand for foreign exchange for imports, which have risen by almost a third to $4.2bn in July from $3.2bn in June after the State Bank removed administrative controls placed over a year ago to curb imports and contain growth in the runaway current account deficit. No doubt, this, together with the other factors mentioned above, are the immediate causes for renewed uncertainty in the foreign exchange market. However, we need to understand that the rupee’s slide as well as the causes of the currency market’s continued volatility are only the symptoms of a far more serious disease, that is, the inherent domestic structure of the economy. While treating symptoms can provide temporary relief from pain, long-term stability of the rupee and economic recovery depend on how quickly we can tackle the structural issues.
Published in Dawn, August 24th, 2023
Battagram rescue
TRAGEDY was averted in KP’s Battagram area on Tuesday when eight individuals, mostly children, were rescued after the wires of their cable car snapped high above the ground.
While all those involved in the daring rescue effort deserve much praise for saving lives, the incident highlights the need for better, safer infrastructure in remote locations such as Allai, where the event occurred, to facilitate citizens.
The occupants of the cable car were travelling to school when the accident happened, leaving them dangling precariously several hundred feet above a river. Combined efforts lasting around 14 hours involving military personnel, rescue workers, and locals were ultimately successful.
While earlier attempts to retrieve the stranded occupants of the car by helicopter saw only limited success, rescuers continued the operation after nightfall and brought the terrifying saga to a close by safely retrieving all the occupants after putting their own lives at risk by sliding down the remaining cables.
Such feats are often witnessed in the movies, but these real-life heroes deserve the nation’s gratitude for their selflessness and bravery in the face of an extremely challenging situation.
The event should prompt the state to resolve the communication issues of communities living in remote areas with difficult terrain, like Allai. In fact, due to limited infrastructure including roads and bridges, such cable cars are often the only practical option for travelling in parts of the mountainous north, especially in KP, Gilgit-Baltistan, and Azad Kashmir.
While safety features may leave much to be desired — many cable cars are built by locals on a self-help basis — this form of aerial transport is a lifeline for residents of remote valleys and hamlets.
They cut both travel time and cost, as a road journey taking hours and costing a few thousand rupees can be made in a few minutes for very little money. But the threat of an accident is ever-present, as Tuesday’s episode showed. In 2017, a similar accident in Murree resulted in several deaths.
Critical infrastructure, such as roads and bridges, is needed to connect settlements in remote places. But if this is too expensive, cable car systems built and manned by professionals can be installed, with bodies like Rescue 1122 and PDMA, KP, hiring trained cable car rescuers in hilly areas such as Battagram, Shangla, Kohistan, and Chitral for prompt response.
The respective local administrations must ensure that safety inspections of such structures are an ongoing process. Moreover, the state needs to provide basic facilities such as schools, clinics, etc. closer to people’s settlements so that they do not have to traverse long distances and treacherous terrain to get an education or visit the doctor. Better telecommunications infrastructure can also facilitate online learning and telemedicine in remote communities.
Published in Dawn, August 24th, 2023