Difficult choices for PM

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CHAIRING the maiden meeting of the Federal Cabinet, Prime Minister Shehbaz Sharif urged his colleagues to prepare for war against the challenges the previous PTI government failed to address — poverty, inflation and unemployment.

The PM cautioned that there were grave problems for the new government like electricity load-shedding, shortage of gas even during summer and prices of petroleum products but expressed the confidence that irrespective of political affiliation and struggle, the members of the coalition government, which is most extensive one in the history of Pakistan, would work in unison to resolve problems of the masses.

He also revealed that the country was “drowning” in debt and it was the government’s job to “sail this ship ashore”.

Dozens of warehouses and factories are closed due to lack of electricity and gas and the government has to find solutions.

The government is, no doubt, facing daunting challenges but given the vision of the Prime Minister and potential of his cabinet members, most of whom are duly capable and experienced, there is no reason that an acceptable solution cannot be found if issues and policies are threadbare discussed by the cabinet as well as political leadership and decisions taken are owned by all of them as they have to sink or sail together.

The problems that the Prime Minister highlighted during his address to the cabinet and later dwelt upon at length by Finance Minister Miftah Ismail are not new as these played their role in the fall of the PTI government which could not give required priority to them and as a result earned wrath of the people.

Sensing utter frustration of the masses, the PTI government, during the fag end of its rule, announced a relief package promising no increase in the prices of fuel till announcement of the next budget besides grant of subsidy on electricity tariff for the same period.

Now the new Finance Minister claims the huge subsidy on POL products is not a ‘landmine’ but an ‘atom bomb’ left behind by the previous government, indicating that the decision will have to be reversed for the sake of economy of the country.

As foreign exchange reserves are depleting fast, it has become a priority for the new government to work for revival of the stalled IMF programme but this would prove to be an explosive task in view of the five conditions that the Fund is insisting on.

The conditions shared by the IMF include withdrawal of fuel subsidy, doing away with tax amnesty scheme, increasing power tariff, taking additional taxation measures and reducing the development program by Rs 100 billion to bring it down to Rs 600 billion through the Public Sector Development Program (PSDP) till end of the current fiscal year.

According to reports, the government is presently bearing a subsidy of Rs.

50 a litre on petrol and diesel and it wants to pass on the burden to the consumer partially but even then its impact on the overall inflation would be huge with understandable political backlash.

A government with full term can afford to take such harsh measures but it would be suicidal for an administration that is there for months or maybe for over a year.

As for additional taxation, the previous government repeatedly hiked them and imposed new taxes both in the budget and in mini-budgets and there was no room for imposing more taxes two months ahead of the new budget.

The development budget already became a casualty of the IMF programme and its further reduction would be directly in conflict with the avowed policy of the Prime Minister to promote economic and employment opportunities.

Withdrawal of the tax amnesty scheme would not matter much but the country cannot afford to increase the electricity tariff, which is already high and considered to be one of the main contributors behind increase in cost of doing business.

The government is not expected to produce miracles in just a week but even then the upward trend in the rupee-dollar parity in the open market should be a source of concern for the officials concerned as this is the real reason for price-hike in Pakistan.

People would be watching with interest if Miftah Ismail delivers on his pledge to ‘fix everything’ in three months.

 

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