Supply crunch now!

Economic crunch is showing its ugly face. The claims from some of Punjab’s cities and towns that petrol is in shortage has sent a wave of uncertainty. It could lead to disruption of normal life, and impact the overall international status of the country as the economy sits on the edge of bankruptcy. This lifeline commodity scarcity news was coupled with the alarming drop in foreign exchange reserves that reportedly slumped to less than $3 billion. Last but not least was the nervousness in the corridors of power that a renewed understanding with the IMF was not in sight, as the lender is adopting delaying tactics by merely pushing a Memorandum of Economic and Financial Policies (MEFP) related to the completion of the ninth review of a $7 billion loan programme, and holding back the staff-level agreement. This trajectory entails that the country is in the woods, and until and unless there is a surgical way out, piecemeal actions are not going to work.

While the government is confident that there is no supply shortage of petroleum products, its going out of stocks may be a handiwork of hoarders and black marketers. It is said that the situation is worst in remote areas, heading towards a standstill and wheel-jam. This crisis of inadequacy has kick-started a storm of allegations too as the Pakistan Petroleum Dealer Association goes on to blame the Oil Marketing Companies for a scuttled supply, putting the consumers in a quandary. This is a pretty serious issue and could impact the wheel of the economy, especially at a time when the chips are down, production is halved, inflation is at an all-time high and the rupee has bled to the core.

Pakistan’s fate it seems hangs on whether a deal is struck with the IMF or not. Though a deal will surely come its way as lenders can never dare to expose Pakistan to a default, which will have severe ramifications geo-politically and socially, it remains to be seen how articulately the government sails through it. The crisis, if any, in the oil supply context must be handled stringently at the administrative level.

Published in The Express Tribune, February 10^th, 2023.

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