When speaking about the state of the economy, officials of the incumbent government never cease to harp on the ‘bad economic management’ of previous rulers. That’s how they justify the ‘corrective’ steps they are ‘compelled’ to take – the steps that make it more and more difficult for the common man to make both ends meet.
Increasing electricity and gas tariffs, besides other taxes, is a quick fix that the incumbent government is most heavily relying upon to fill up the budgetary gaps.
Yet again, the government is preparing to swallow the ‘bitter pill’ of burdening the already hard-up masses. Finance Minister Asad Umar has recently told the National Assembly’s Standing Committee on Finance and Revenue that the challenges of fiscal deficit and rising inflation have grown serious due to the ‘politically-motivated economic measures’ of the PML-N government.
Warning the public about a fresh wave of inflation, the minister made no qualms about the need to further increase the cost of utility services – which are not even sufficiently available – to make up for the fiscal deficit.
The official word on the government’s current account is worrying as well, and points towards an imminent rise in deficit under this head too. The finance minister has confirmed that Pakistan has not been able to secure a $3.2 billion oil-on-deferred-payments facility from the UAE – something that will reduce the assistance package from the seven-emirate confederation to $3 billion, and is bound to bring under stress the official foreign currency reserves that have so far been maintained with help from friendly countries.
Even more worrying is the fact that the development has come amid a delay in finalisation of an agreement with the IMF for a bailout package, which may have a negative effect on the government’s bargaining position.
But all that only means a ‘bitter pill’ for the government that it has learnt to swallow well.
Published in The Express Tribune, March 16th, 2019.
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