DESPITE the fact that the government was trying its level best to address economic and financial challenges in an effective manner, rating agencies, global institutions and analysts are painting a bleak scenario mainly because of political instability and lop-sided nature of the so-called structural reforms. The BMI, a Fitch Solutions company, has forecast that the present coalition government will remain in power for the next 18 months giving way to a technocratic administration. Its report doesn’t see an imminent crisis haunting Pakistan but warns that a lot depends on the political stability and climatic conditions conducive to agriculture. Similarly, the Asian Development Bank (ADB) has warned that the challenges for Pakistan are compounded by the ongoing economic strain and the need for continued reform. And Moody’s Ratings has anticipated that the International Monetary Fund (IMF) Executive Board will approve the $7 billion loan programme for Pakistan, but is doubtful about whether the country will complete the 37-month Extended Fund Facility (EFF), which includes tough structural reforms amid a politically weak government. In a related development, based on his intimate knowledge, former Minister Dr. Gohar Ejaz has blamed contracts with the IPPs for the ongoing crisis in the energy sector, calling for a revision of the clause regarding capacity payments, which add an unjustified burden of Rs. 2 trillion on consumers.
No one should doubt the intentions and sincerity of the PML(N)-led coalition government, which is taking difficult but necessary decisions to help the country stand on its own feet at the cost of its own popularity. However, there are various odds in the way of smooth implementation of these and other desired measures. The government lacks strength to pursue the reforms agenda as it finds itself hapless in the face of machinations by some powerful lobbies and pressure groups that are active to protect their vested interests at all costs. The government-in-waiting i.e. the opposition should be thankful to the incumbent rulers for launching bitter reforms and incurring wrath of the masses, as any improvement in the country’s economic and financial health would be to the advantage of the future governments. This is, however, not the case and the opposition is not only discarding every gesture for reconciliation and talks but also criticizes even those decisions that are taken purely on merit. It is also responsibility of the government to promote national unity but strategies like the plan to ban the PTI run contrary to this cherished objective. The country needs complete peace and tranquility but leg-pulling goes on every now and then in the shape of violent protests and sit-ins as we are witnessing these days at Faizabad on an issue on which the Government of Pakistan has virtually no leverage. Analysts rightly apprehend that another round of political instability, violent protests and natural disasters like excessive rains and floods (with consequences for agriculture and infrastructure) could derail the process of economic recovery. Already, there are forecasts that the inflation rate would go up further during the ongoing financial year and the economy might not grow at the targeted level due to multiple factors. It is also a reality that frustration is peaking among masses due to lop-sided reforms being pursued by the government. Instead of correcting the path, the Government is erring, as before, by adding more burdens on electricity consumers. Capacity payments being made to the IPPs under power purchase agreements are mainly to be blamed for the crisis and there is a ray of hope after the announcement of the Minister for Energy that the possibility of renegotiating the agreements is being explored. There is no time to waste on this account as the government has to find a satisfactory solution to the energy crisis, which is becoming a major source of social unrest. Extreme care is also needed while taking a final decision about the proposed right-sizing plan, which could compound the unemployment situation. We would also warn that the country has suffered hugely due to experiments and, therefore, all stakeholders should make conscientious efforts to ensure all elected governments complete their tenures so that they could focus on their agendas.
