PRIME Minister Shehbaz Sharif on Sunday expressed satisfaction over a falling rate of inflation and improvement in other economic indicators. In a statement from the Prime Minister’s Office (PMO), he noted that the Consumer Price Index (CPI) fell to 11 per cent in July and welcomed economists’ forecasts predicting a further decline. His statement came after the Ministry of Finance said in its August outlook on Friday that inflation was expected to remain in the range of 9.5-10.5pc in August and further decline to 9-10pc in September “on account of stability in economic indicators”. The Prime Minister asserted that the government was pursuing a policy of economic reforms and the implementation work was rapidly in progress over the so-called “rightsizing” policy of the government, which he himself was monitoring, expressing the confidence that its positive impact on the economy would be visible soon.
There is no doubt that the Government was working hard to streamline its working and provide much-needed relief to inflation-ridden people. As a result of the prudent policies of the Federal Government and people-friendly strategies of the Punjab Government, led by visionary Maryam Nawaz Sharif, the difficulties of the masses have mitigated as inflation is coming down and economic indicators are showing a positive trend. While the Federal Government, for the third consecutive fortnight, slashed prices of POL products, the Punjab Government deserves credit for keeping an effective check on the prices of wheat flour, which is the staple food of the people. The Punjab government also provided a significant relief to the electricity consumers of the province and those of Islamabad for two months, allowing fiscal space to households to manage their budgets in difficult times. In its ‘Monthly Economic Update and Outlook’ for August 2024, the Finance Ministry noted that external indicators including exports, imports and worker’s remittances are following an upward trend. However, it warned that the stable outlook of the external sector hinges upon a stable exchange rate, revived domestic economic activities, better agriculture output, low domestic and global commodity prices and improved foreign demand. The State Bank of Pakistan (SBP) is also gradually bringing down the interest rate, which will have a positive impact on the overall economic business environment but there is a need for a sharp reduction in the interest rate as the economy cannot thrive in the prevailing circumstances.
The optimism expressed by the Prime Minister about a change for the better in the coming days augurs well but much depends on how ultimately the Government handles crucial issues that determine the rate of inflation in the country. It is a foregone conclusion that reduction of electricity bills for two months of August and September by Rs. 14 a unit is a temporary relief and people are impatiently waiting for a sustainable solution to the issue. The PM has also expressed the hope that the ongoing process of right-sizing will benefit people in the long run. This might be true as the Government will be in a position to spend the money through right-sizing on welfare of the people. However, in the immediate context, the right sizing will complicate the unemployment situation in the country as thousands of employees are destined to be declared surplus and abolition of one hundred and fifty thousand vacancies means scarce opportunities for employment in the public sector. There are also reports that the Government wishes to get sweeping powers in respect of retention of employees and increase or decrease in their pension benefits, which would deepen the sense of insecurity among civil servants affecting their overall performance and service delivery. And for a satisfactory resolution of the economic woes of the people, the Government will have to resolutely implement its plans for expansion of the tax net as only then the country would come out of the vicious cycle of the ballooning debt and accompanying tough conditions.
