THERE is no doubt that economic indicators have started improving thanks to the active interest and vigilance exercised by the newly created Special Investment Facilitation Council (SIFC) but the situation is far from satisfactory as far as the trickle down effect of the positive indicators is concerned. For the last two years, rising inflation has been the main concern of the common man but there are no indications as yet that this issue is going to be resolved as per the satisfaction of the people. Instead, the situation is going to compound further as has been predicted in the monthly report of the Ministry of Finance and in view of measures this and the future governments will have to take as per understanding with the International Monetary Fund (IMF).
Two days after the central bank elevated its inflation forecast; the federal government on Wednesday significantly upwardly revised its projection, stating that inflation may remain around 28.5% for January due to food supply shocks. The report, prepared by the Economic Advisory Wing of the Finance Ministry, also suggests that the inflation rate may remain around 27.5% in February. The Ministry itself is citing elevated prices of perishables and vegetables, along with increased electricity and gas costs, as contributors to inflationary pressure and this phenomenon has also been acknowledged by the State Bank of Pakistan (SBP). In fact, there is hardly any possibility of any relief on account of inflationary trends until and unless the government reviews its existing approach of revising gas and electricity tariffs as well as prices of POL products upwards frequently. These revisions are exploited by the greedy segments of the business community to mint money at the cost of difficulties and woes of the people due to weak governance and regulatory framework. With every increase in the prices of POL products and a hike in electricity and gas tariffs, prices of commodities and services are increased disproportionately and these are not revised downward in the same proportion when relief is provided in prices of POL products. It is also a matter of concern that despite several downward adjustments in the price of petroleum products, NEPRA/Government did not provide any relief on account of fuel adjustment and quarterly adjustment in electricity bills. The Finance Ministry has predicted a marginal reduction in inflation during February but this too seems to be an impossibility as prices of petrol and diesel have been jacked up significantly for the ongoing fortnight, which will push up prices of goods and services further ahead of holy Ramadan. Ironically, the Central Power Purchasing Authority (CPPA) has sought another hike in fuel adjustment to the tune of Rs. 5.6 per unit. The issue is becoming a question of life and death for the fragile economy and a satisfactory solution should be found by the SIFC after input from different stakeholders, especially when there are genuine complaints that the countries illogically generate electricity by giving preference to run inefficient plants rather than the cost efficient plants. Instead of penalizing honest consumers by way of periodic increases in electricity tariff, effective steps should be taken to tackle the menace of theft and priority should be given for improvement and modernization of both transmission and distribution networks. Apart from electricity, gas prices have also become unsustainable for the common man as most of them have now started shifting from piped gas to LNG because of hefty bills. In a related development, the Council of Common Interests (CCI) was informed that 85 percent of the crude oil and 75 percent of the gas used in the country was imported with precious foreign exchange reserves, which was a burden on the national exchequer and that the present oil and gas reserves were depleting fast. However, its meeting was also informed that according to a conservative estimate, 35 trillion cubic feet of tight gas reserves were available in the country. There is dire need to employ modern technology to extract tight gas to help meet growing requirements of the country. Efforts should also be made to remove hurdles in the way of implementation of both IP and TAPI gas pipeline projects besides augmenting LNG imports.
