A legacy of inflation

The PDM government is gone, leaving a record of indecisiveness that contributed to its chequered economic performance. However, one area where no one can dispute its failure is inflation. Here, the PDM government has painted its legacy in the darkest shade of black — which many Pakistanis can no longer afford because of that very same inflation. The government’s 16-month tenure saw unprecedented inflation across the board, as a convergence of mismanagement, bluster and palace intrigue saw Prime Minister Shehbaz Sharif’s government find new and innovative ways to shoot itself in the foot.

The government’s defenders will often use a bomb analogy to try and absolve their leaders of blame, but that is not telling the whole story. Yes, the PTI government’s last-ditch decisions took the effect of an economic time bomb, and may have been intended — as the PDM later claimed — to cripple Shehbaz’s government before it had even taken charge.

But it was the PDM, and more specifically, the PML-N, that assigned an expert to fix the problem, waited till it was mostly fixed, then fired him to bring in the boss’ confidant, who rolled back some unpopular but effective — and necessary — policy decisions, only to reintroduce them several months later. The government also failed to improve direct tax collection, which would have satiated the IMF, as it would have increased revenues without adding inflationary pressure the way indirect taxes do. Ministers also kept complaining about currency speculators and commodity hoarders without taking any action against them.

Most of the government’s food price control policy focused on Utility Stores and other urban solutions, meaning that almost 60% of the population did not benefit. Apart from food, the government even failed to check inflation in basic areas such as education, as the prices of books, stationery, tuition and transport were largely unchecked. While inflation has fallen, that same indecisiveness has left it relatively high, and too open to even the slightest shock, to count as a success.