Mixed signals

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IN the backdrop of a visible improvement in the economic conditions of the country, people of Pakistan received a shock when the Government jacked up prices of petrol by a significant margin for the current fortnight.

Together with an alarming increase both in base electricity tariff and fuel adjustment charges, the latest hike would surely trigger a fresh wave of price-hike, putting more burden on the masses.

The Government claims the prices of POL products have been adjusted in line with the prices of oil in the international market but facts speak otherwise.

During the last few days, the Brent price went down from a little over $100/barrel to $94.9/barrel till Monday.The second price determinant i.e. exchange rate also raised expectations of the people that there would be a down-ward revision in the prices of petroleum products as the local currency gained its strength by over 20 rupee.

There are also projections that the price of oil would come down further in the international market and the rupee would appreciate further against the dollar once IMF resumes its financial assistance followed by packages from some friendly countries.

Saudi Arabia has already agreed to extend the period for return of its deposits worth $3 billion (with the State Bank of Pakistan) and this development had a salutary impact on the stock market and the exchange rate stability.

Under these circumstances, the authorities concerned should realize that the people of Pakistan have already suffered a lot due to the unprecedented measures that the incumbent Government took to avoid a Sri Lanka-type default.

If the Government has the financial space to oblige agitating businessmen, who resisted imposition of a small amount of tax through electricity bills, then there is no reason people should, at least, get relief when prices of oil come down and the rupee appreciates against the dollar.

The tendency to mint money through electricity bills (increase in base tariff, full recovery of fuel price differential and a multitude of taxes) also needs to be discouraged as electricity is a necessity and not luxury.

 

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