Massively unpopular and economy-crippling financial decisions of the PMLN-led government are practically asking for mass protests
The present administration understands that its hopes are pinned on the June 10th budget, as contentious discussions with the International Monetary Fund (IMF), rising prices, and growing gasoline expenses put the country’s economic leadership in a bind. At a carefully watched news conference last week, Finance Minister Miftah Ismail announced the federal government’s 30 rupees (60 in total) rise in the price of practically all petroleum goods, the second such increase in recent memory. Ismail added, “The government cannot sell fuel and diesel at a loss, regardless of what the IMF advises.”
The ruling administration did not establish such distinctions in the run-up to acquiring power, nor did it fully explain the dangers of directing Pakistan’s economy in the face of these restraints. The administration is striving to sell the idea that all of these painful economic measures are the product of intelligent preparation and forethought by suddenly finding the intricacies of price reduction and managing public relief.
Rising gasoline costs and IMF-driven rationales are putting the public’s patience to the test, and it’s becoming more likely that the government will be chastised. Consecutive double-digit increases in gasoline prices are a sobering sign of the government’s limited maneuvering room in delivering its promised “relief.” The fact that the restrictions on providing public assistance were clear during the previous government further adds to the untenability of these economic decisions, thereby undermining the premise that the national economy can be redesigned under the Sharif alliance.
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A series of tweets by deposed Prime Minister Imran Khan, attempting to draw a comparison between current and prior exigencies, provided a quick review of the previous Pakistan Tehreek-e-Insaf (PTI) government’s pandemic-time economic difficulties. On the IMF, Khan’s claim that most of the criticism of his governance is political rather than objective is bolstered by the fact that certain members of the ruling coalition were outspoken critics of the IMF while they were in opposition. The Sharif regime increases the possibility of a popular revolt by making economic conditions less sustainable for the populace.
Understand that, notwithstanding the rumors of Assembly resignations, Khan’s status in the opposition is well-suited to gaining political mileage from the government’s present and future energy price hikes. Consider the possibility that the government would be forced to raise energy and power costs shortly due to a bleak worldwide market scenario, as well as the contribution of subsidies to present price levels not reflecting other additions.
A petroleum development levy (PDL) negotiated with the IMF earlier this year, as well as a double-digit rise in the General Sales Tax (GST) on gasoline, are included. It would be absurd to expect those in charge of the situation to persuade the public that these hikes are either necessary or holdovers from the previous government, to avoid taking full responsibility. In reality, individuals in charge of putting these policies in place, whether they like it or not, have the burden of public responsibility.
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Complicating matters even further is the fact that Islamabad’s troubles in obtaining money from commercial banks and the foreign bond market have been scrutinized more closely under the current government. The administration treads a fine line in mentioning those limits and using them to promote the importance of an IMF deal. At a virtual conference, Finance Minister Miftah Ismail remarked, “All roads lead to the IMF.” The fact that IMF efforts to eliminate subsidies were at the heart of the government’s campaign to hike fuel prices suggests that there will be more to come as the loan program moves forward.
If the Sharif coalition is not matched by an alternative path, the political and reputational costs associated with each hard adjustment might easily cast a shadow on its existence. Economic mismanagement might become the major focus of public demonstrations at Khan’s rallies, giving his claims that the ruling alliance constitutes an “imported government” a more citizen-centric edge.
The concept that Pakistan’s economic problems may be both a source of leverage for the ousted and a source of vulnerability for those in power speaks to a larger reality about the country’s current trajectory. Consider the following scenario: Islamabad is rapidly nearing a stage where, regardless of who wins the election, there will be no silver bullet to solve the country’s pricing, debt, and affordability problems. Within the Sharif-led side, there appears to be a growing awareness that the alliance is on thin ice. Look no farther than Prime Minister Shehbaz Sharif’s own words: in a recent speech, he called for a national consensus on the economy, but demanded that it not be “disrupted by changes of administrations.”
All that is required to lend power to such disturbances is a strained economy and a coalition without broad popular backing. The more the administration leans toward politically disastrous financial policies, the more these disruptions and anti-government demonstrations are likely to grow. It’s a small consolation that a huge PTI-led march to the capital, which would have caused a major disturbance in the government’s eyes, has been averted for the time being. However, the consequences of unpopular economic policies may become obvious in the coming weeks, as the current measures will have had time to take effect.
