Rava is an online news portal providing recent news, editorials, opinions and advice on day to day happenings in Pakistan.
The coalition government has faced multiple challenges since taking office. The coalition led by the PML-N has had little to no room to shield the populace from the financial hardships brought on by the difficult decisions it has been forced to make in the last three months to correct the severe economic imbalances, given the fragile economy it inherited from the previous government and amid speculations of an impending default.
The IMF, whose assistance and bailout package Pakistan desperately needs to avoid defaulting, makes its task much more challenging. The government has made a number of unpopular decisions in order to obtain funds from the IMF and other multilateral and bilateral creditors, including the reversal of fiscally unsustainable fuel subsidies and the imposition of massive taxes in the budget. The steep increase in power prices of Rs7.91 per unit, which raises the national average electricity tariff to Rs24.82 per unit from the existing Rs16.91, is just one of them. This has led the collation partners to lose considerable political capital, which was validated by the ruling PML-N’s crushing rout in the recent by-elections in its own stranglehold of Punjab.
It is an understatement to say that the higher electricity costs will trigger a new bout of hyper-inflation, which is predicted to average above 20 percent throughout the current fiscal year. This will put further strain on the budget of low- to middle-income people since they are already being crushed by multi-year high energy and food prices. It’s also quite difficult to rule out the likelihood of political and social unrest as survival is becoming increasingly challenging with each passing day.
Most disappointingly, despite subjecting people to such suffering and reaching a deal with the IMF, the economy still does not appear to be stabilizing. An astonishing decline in the rupee’s value over the past three months and a worsening of the economic crisis as a result of the ongoing political circus have eroded hope of any “respite” that might have followed a drop in global energy costs. The situation has come to a point where it’s not possible for a government or party to extricate of this imbroglio single-handedly in the future. The politicians will have to get their act together and deal with their differences with maturity and civility if they want to turn around the economy and assuage the hardships of the inflation-hit people.