The people of Pakistan were shocked on Thursday night when Finance Minister Miftah Ismail announced to raise fuel prices by Rs30 per litre in a move to appease IMF for the revival of the loan programme for Pakistan.
POL prices, as well as electricity rates, will rise further in the near future, as the subsidy has only been partially reduced, while petroleum levy and GST still need to be applied. Therefore, the shockwaves of the increase will be felt at the fuel pump, and in every sector of the economy. Though the markets have responded positively to the hike, and the rupee also gained slightly against the dollar, consumers had already begun to feel the pain.
The fuel prices were frozen by the former PTI government as a parting shot and the present administration had little choice but to raise them, though this could have been done incrementally. The IMF mission chief also complained in the recent talks with Miftah Ismail that the commitments made by former Pakistan government were violated.
The economic planners of the country must put their heads together and come up with methods to dampen the impact, particularly on the working and middle classes. People are already on tight budgets, and higher fuel prices can well trigger an inflationary storm.
The state must look into exactly how much of an impact POL hike have had on the prices of everyday items, to ensure vendors are not fleecing the public. Price-checking mechanisms — rarely enforced by the state — can be of use in this scenario.
In the longer term, increasing wages and economic and industrial growth are likely solutions to our financial stagnation, as is increasing taxes on the rich and closing legal loopholes for the elite that give them tax breaks. Those who live luxurious lives should pay their fair share, instead of the overtaxed being further taxed, to improve the nation’s financial health.
