THE World Bank has expressed apprehensions that following the upcoming elections, strong and organized vested interests may spur a number of potential reversals on critical policy reforms — committed to multilateral lenders — posing ‘high’ macroeconomic risks to Pakistan. The possible reversals include the rationalization of gas and electricity subsidies, lower trade tariffs and better property tax realization. However, it is willing to provide further support in tandem with the International Monetary Fund (IMF) under another medium-term loan programme to be signed by the newly elected government, subject to the successful progression of the ongoing reform measures, for even deeper and broader reforms.
The apprehensions expressed by the lender are understandable as this happened repeatedly in the past as elected governments find it difficult to take difficult decisions as these have a cost and we witnessed this in the case of the PTI and its successor Coalition Government that became extremely unpopular for the very reason. In fact, people justifiably look towards the new Government for relief and major political parties are also pledging to take steps towards that direction. Inflation has become number one priority for people of Pakistan as they have been forced to compromise their living standards because of sharp increase in price-hike and a squeeze in income and resources because of the economic recession deeply linked to unemployment. Both electricity and gas tariffs have seen unprecedented hikes in recent months and there is a push by the IMF to go for further upward adjustments despite the fact that this strategy has proved counter-productive as it failed to address challenges (like circular debt) facing the energy sector and instead compressed economic growth. If subsidies, incentives and relief work in other parts of the globe, there is no reason these should be treated as villains provided the authorities concerned also focus more on mobilization of domestic resources.
