The outgoing government gave a parting gift to the nation by hiking the prices of petroleum by a staggering Rs20 per litre. The increase will certainly bring a new wave of inflation on the burdened masses who are facing the worst of the economic crisis.
It is perhaps the final fortnightly review before the current PDM government steps down. The coalition government could have avoided the latest onslaught or passed it to the interim setup but still chose to give the final blow. The PDM ruled for the past 15 months with complete impunity in the absence of a formidable opposition and passed laws to benefit themselves.
At the same time, the State Bank maintained the key interest rate at 22 percent and expects to tame inflation. The IMF recently released a report which blamed the central bank for failing to predict that the inflation rate will rise further. It called for tightening the monetary policy to curb inflation and the central bank complied. Despite all efforts, the inflation rate will still hover around 25 percent till 2025.
The latest hike in petrol prices could come at a huge political cost to the PML-N. This could be reflected in the next elections as people take to the ballot box. The government realizes the consequences but still chose to bear them with no options left. With elections due in October, campaigning is likely to be driven by promises of development and fixing the economy.
Years of financial mismanagement have pushed Pakistan’s economy to the brink, exacerbated by the Covid pandemic, global energy crisis, food shortages and devastating floods last year. The IMF deal provided temporary relief from ballooning foreign debt which brought the nation on the verge of default before friendly countries stepped in and rolled over loans.
Ordinary Pakistanis are feeling the brunt of the economic and political turmoil. Food prices rose by 40 percent as compared to last year and transport costs increased by 20 percent. The poverty rate has reached 37.2 percent and the rupee plunged to a record low against the dollar, making imported products more expensive. It needs to be seen if the masses will be able to exert themselves in the next elections even though it would do little to affect their destiny.
