The coalition government made the shocking announcement of again hiking petrol prices by Rs30 per litre – the second time it has done over the last two weeks. Citizens vented anger over the staggering rise of Rs60 since the government took over and have even staged protests.
The government took the tough economic decision to remove all petrol subsidies to revive the IMF loan programme. It realized the political fallout but was perhaps emboldened by the subdued reaction during the previous hike. Soon after the second hike, enraged protestors vandalized petrol pumps giving a glimpse of the public wrath if the situation deteriorates.
As expected, Imran Khan is set to use the opportunity to build political pressure against the government by announcing countrywide protests. This will vitiate the atmosphere and worsen the political crisis. The country has gone bad to worse in the last couple of months ever since the government took control after Imran’s ouster.
The petrol hike comes after the government announced to hike the power tariff by Rs7.9 percent – a staggering increase of 46%. Amid the sweltering heat, citizens are braving power outages for 8-12 hours as the shortfall has reached 7000 MW. The central bank foreign reserves have fallen to single-digit and stand at $9.7 billion, the stock market is tumbling and the currency is struggling to stay afloat. Inflation has spiked to 30-month high of 13.8% and corporations are using it as a cover to hike product prices.
The Sharif government is desperate for financial assistance to avoid an economic catastrophe. It wants to do all it takes to avoid a Sri Lanka situation as that would alter the geopolitical situation if the country defaults. The steady flow of oil on credit needs to be maintained to avoid scarcity. It also needs to rely on foreign banks, multilateral institutions, and friendly countries to ward off a balance of payment crisis.
The people have to tighten their belts and prepare for an even bigger disaster. The elite should share the burden and the perks and privileges such as fuel allowances enjoyed by politicians and government officials should be revoked. The chaotic situation on the streets can get out of control anytime and will be difficult for the government to control.
