The government is on track to fulfil the last remaining condition — an increase in taxes on petroleum products — of the stalled IMF loan programme, much to the chagrin of commuters in particular and all citizens in general. Finance Minister Miftah Ismail’s recent announcement also put an end to claims from various quarters that the increased political instability following the Supreme Court verdict on the election of Punjab’s chief minister would lead Prime Minister Shehbaz Sharif’s government to delay any policy move that could lead to further public outrage.
The increase will be staggered, as previously planned, to help ease the impact of the price hike, while also giving the government a hint of hope that an international oil price decline in the coming months may help further soften the blow. Unfortunately, the crashing rupee is only making it more certain that whatever happens in international markets, the prices of petroleum products in rupees are certain to rise.
Coming on the heels of the news that the government plans to sell off state assets while bypassing all existing tendering and anti-graft rules, PML-N leaders are all expecting severe backlash as continuing to increase the levy would provide fodder to the PTI, even though it was the Imran Khan government that agreed to many of the backbreaking loan conditions which the incumbents are now saddled with and that the former ruling party is now railing against.
Meanwhile, the government also has to deal with other harsh IMF conditions that are threatening to create internal revolts. One of the most egregious is the tax on overseas perks and allowances for foreign office staffers, since these are technically designed to ensure they receive living — rather than extravagant — wages in the countries they are posted in.
However, there are some positives as imports have come crashing down since recent restrictions were imposed, although the sustainability of those restrictions, which are wreaking havoc on the economy, is another grey area.
Published in The Express Tribune, July 29th, 2022.
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