Hyperinflation and the economic volatility
AN infant recently died in Karachi after a financially distressed family allegedly attempted suicide by consuming a toxin substance. The police claimed the family’s weariness and frustration with the ongoing back-breaking inflation in the country caused the incident. This is the tip of the iceberg as dozens of such incidents caused by the grinding financial constraints go unreported and unnoticed in the mainstream media. The degenerating public plight is hardly something unexpected when the economic and HDI indicators touch historic lows. The hyperinflation has laid bare the claims and competency of the PDM-led government within a short span of a year. The so-called “extensive experience” of the government and its financial wizard has been turning the lives of the disadvantaged classes intolerable. They have transformed the country into a practical model of a “crisis state”.
Pakistan is currently teetering in the throes of a multidimensional crisis. The ongoing political instability, the resurgence in terrorist activities, economic volatility caused by the policy failures and the last year’s devastating flood have been costing dearly the country’s image, institutional efficiency and the lives of the ordinary public. The country’s economy paints a dismal picture — something not seen before since its inception. With foreign reserves hardly left enough for paying imports for weeks, dwindling investor confidence and the fast devaluation of the rupee, inflation touches all-time high. Though the official statistics claim inflation to be around 50 per cent, the ground realities paint a more horrifying inflationary trend in the country. The unprecedented hike in fuel and food and their shortage has made living unbearable for most of the static, low and daily wage income groups. Moreover, a slashing in industrial activities added to already high unemployment in the country.
As the country stands with foreign reserves of just $3 billion, the practical default is imminent unless it receives Dollar inflows for the loan payments. The fate of the pledged $9 billion claimed fund by the donors remains uncertain. The Bailout Package of IMF is also yet to practically conclude. Since it is struck in the review stages and government scrambles on the conditionality and assigned targets, the package seems in limbo. The response to Pakistan’s requests to China of rolling over debt is yet to be clear. Saudi Arabia has also reportedly stated that it wouldn’t offer easy money to Islamabad without necessary reforms.
Amidst this unprecedented economic turmoil, the PDM-led coalition seems to have failed to stop reversing the economic trends, let alone put it on a positive trajectory. The hope for the materialization of financial help from friendly countries dwindles by the day. The slack implementation of austerity measures cannot contribute to buoyant the economic ship as the country’s economy. The huddles by the overcrowded cabinet failed to come out with pragmatic economic plans for arresting the economic downward slide. Moreover, the infamous tough economic measures weigh heavily on the public lives, as these were aimed at targeting the public alone. Instead of taxing the elite and taking back all subsidies from them, the policymakers, headed by the economic tsar, have subsidies to the elite. The pork barrel politics continues unabated as the desperate PDM desperately tries to win votes by lavishly flowing cash in the politicized projects to the targeted factions and constituencies.
Nothing has that much agonized for the underprivileged class of the country as the lethal throes of inflation. Although the lives of the people have never been a bed of roses in Pakistan, the economic meltdown and inflation compounded by political instability have made the lives of people insufferable. The monster of inflation is increasingly bloodthirsty and keeps on feasting on the lives of people. During the month of Ramzan, the price hikes made the staple foodstuff and commodities beyond access for the far high number of people in the country.
The economic team itself appears clueless about stopping this economic meltdown, let alone reversing it. Against the backdrop of ongoing political volatility, the country’s economic plight is expected to get worse. Even if the promised funds from IMF and friendly countries are received, it would still be uncertain if they would reverse the economic degeneration in the absence of key economic reforms demanded by economic experts for decades now. Unless the country reels back on track, the public, particularly the destitute section, is going to suffer the insufferable shocks of hyperinflation.
—The writer is an anchor person and commentator.
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