PEOPLE of Pakistan have become weary of the unstopped inflationary pressure and there is no hope for the much-needed imminent relief mainly because of the vulnerable position of the government in its talks with the International Monetary Fund (IMF). The two sides are holding talks to review the progress made by Pakistan under the latest deal and reports suggest the Fund is pressurizing Pakistan to increase further electricity and gas tariffs, expand tax base and impose tax on agricultural inputs. The IMF is also reported to be questioning measures taken by the government to stabilize the rupee and objecting to the role of the Special Investment Facilitation Council (SIFC).
Inflation in Pakistan is highest in the region and the phenomenon has much to do with the governmental policies and gross interference of the IMF. People faced immense pressure due to the bitter decisions taken by the government during the last two years at the instance of the IMF that have pushed millions more below the poverty line. They were, therefore, expecting relief but there are no indications of any respite in the price hike in the foreseeable future and instead the price situation is going to aggravate further. People had taken a sigh of relief when the rupee started stabilizing due to administrative measures initiated by the government to check illegal flight of the dollar but the IMF, which otherwise pleads for a market based exchange rate, becomes uncomfortable when the rupee gains against the dollar. It was because of this pressure that the authorities gave a pause to their operation against exchange rate manipulators that the rupee is once again steadily losing against the dollar. Similarly, the price of oil have come down in the international market and the government’s decision to pass on the relief to the people was widely hailed but in the last fortnight, the authorities backtracked and kept prices of oil products unchanged whereas there were expectations of a reduction to the tune of Rs 20 a litre in the prices of petrol and diesel. There were also initial reports of possible reduction in the prices of POL products for the next fortnight but latest reports suggest the government was contemplating to increase the price by Rs 3 a litre. As for further increase in electricity and gas tariffs, the prices of gas have just been enhanced significantly for all categories of consumers while people have not been able to recover from the shocks they received due to an unprecedented hike in the electricity tariff. In many cases, the total amount of the electricity bills exceeds the monthly income of households and suggestions to increase the rates further would amount to their economic murder. The IMF is urging the government to hike the tariff to resolve the mounting circular debt but in the ultimately analysis the discos/government would suffer more financial losses as more and more people are taking recourse to solar solutions that envisage export of surplus electricity to discos. As if all this was not enough, the Punjab Government, on Monday, notified a quantum jump in the sale price of wheat flour at Rs 139.9 per KG. The plan to bring retailers in the tax net is a step in the right direction but it is also understood that the burden would be transferred by shopkeepers to their customers. Media reports also suggest that the Prime Minister has approved a five point plan to increase tax collection, which would cause more inflationary pressures for the common man. Apart from all this, subsidies are being withdrawn and the Public Sector Development Program (PSDP) at the federal level will also be slashed down for the current fiscal year in a bid to re-align the expenditure side, which means squeezed economic and employment opportunities for the hard-pressed masses. It should also be a matter of concern that the IMF has started poking its nose in matters like SIFC which is a purely internal affair of the country. The SIFC is there to complement efforts of the government in attracting local and foreign investment by way of removal of irritants and it is none of the business of the IMF to object to its role.
