Pakistan Railways has laid off 18% of its “non-essential staff” as part of its efforts to improve performance and align with the reform agenda mandated by the International Monetary Fund (IMF), Prime Minister Shehbaz Sharif was informed on Monday.

The move is an important step in the implementation of ambitious reforms required by the IMF under its $7 billion economic bailout program.

During a meeting chaired by the Prime Minister to review the performance of the railway sector, the Premier directed the organization to modernize its operations. He emphasized the need to attract passengers by offering competitive and improved travel services through public-private partnerships.

He also directed Pakistan Railways to hire professional and skilled manpower, replace outdated systems with modern technology and develop a comprehensive strategy to increase regional trade, especially with Central Asian countries.

In addition, the Premier urged Pakistan Railways to utilize its vast land assets for business activities in partnership with the private sector to generate revenue.

The Prime Minister’s Office (PMO) reported that Pakistan Railways suffered Rs10 billion in losses during the devastating 2022 floods as much of its infrastructure remained submerged for 35 days.

Despite setbacks, the railways improved its performance in subsequent months and has earned profits equal to the original cost of its freight operations, the PMO said.

The reforms aim to transform Pakistan Railways into a self-sustaining and efficient organization capable of playing a central role in the country’s economic development.

However, the layoffs highlight the tough decisions being made to meet IMF conditions and improve the long-term viability of state-owned enterprises.

The IMF has long recommended improving governance in loss-making state-owned enterprises (SOEs) like Pakistan Railways, which have accumulated billions in losses over the years due to mismanagement, operational inefficiencies, heavy debts and corruption.

Privatizing public sector organizations and reducing redundant staff are among the critical reforms Pakistan has undertaken to boost its struggling economy.

Pakistan railways, plagued by decades-old infrastructure and mismanagement, have been particularly affected. The organization has faced frequent train accidents due to outdated signaling systems and tracks, further tarnishing its reputation.