NationalVOLUME 17 ISSUE # 35

The price for inflation

There seems no end to people’s miseries, inflicted on them due to skyrocketing, unprecedented inflation in the country’s history. The incumbent coalition government in the Centre was formed around four months ago with the promise of reviving the national economy in the shortest possible time, as the ‘toppled-through-no-confidence-motion’ government of Imran Khan had pushed Pakistan to the brink of economic collapse. The Prime Minister Shehbaz Sharif-led coalition government made a number of “difficult decisions” to appease the IMF and steer the country out of gigantic problems with the help of the international lending agency.

However, after facing a humiliating defeat in Punjab by-polls, the party’s supreme leader, Nawaz Sharif, blamed the “difficult decisions” for its failure in the by-elections. He said that his party had paid the price for “difficult decisions” taken by the coalition government. The political parties and the powers that be could take U-turns and rearrange their forces for another battle, but the rapid changes on political and economic fronts had put the masses in a quandary. They find no way out how to get rid of the killing inflation, brought on them due to successive governments’ policies.

Political changes at the Centre and Punjab have failed to provide any relief to the masses so far. Foreign exchange reserves are falling as import bills on the back of oil prices grow, bond yields are increasing, and remittances are straightening out while financing needs increase amid rupee depreciation, double-digit inflation and stock exchange on a downhill path. This all is a source of perpetual pain for millions of Pakistanis.

The possibility of survival of the coalition government in the Centre, led by the PML-N, which suffered a clear defeat in Punjab by-polls, has diminished more now. The term of its tenure or general elections and the future government have varying degrees of economic costs. The fundamental economic challenges are back to square one despite a lot of pain absorbed by people over the last couple of years. Pakistan again stands at the crossroads it comes across every election cycle. The difference this time is that challenges are greater than before and remedies may also be even tougher as uncertainties prolong.

The Pakistani people, once again, believe that inflation is the most important issue facing the economy and the country, and they don’t think that the incumbent coalition government is paying attention to it. A general perception among them is increasing that the 11-party coalition is in power only to get their cases abolished through courts, and public welfare is not their priority. This explains why so many Pakistanis disapprove of PM Shehbaz’s economic performance.

In the past, all political parties have been using inflation as a weapon against their opponents in their political campaigns. During the previous government, the opposition of that time, the Pakistan Democratic Movement (PDM), started political activities against Imran Khan’s government. They organised a ‘Mahngai Mukao March’ (End inflation march), ‘Cycle March’ and ‘Tractor March’ to protect against inflation and to topple the PTI government. When Shehbaz Sharif took over the government, the biggest challenge before him was to deal with rising inflation. Moreover, it was also the PDM’s main point in its campaign against the previous government. But after coming to power, the coalition government did contrary to what it had promised to the people: reducing the inflation rate and petroleum products’ prices.

After a couple of price hikes, the coalition government then started claiming that the PTI government had fixed the petrol and diesel prices in violation of its promise made with the International Monetary Fund (IMF) and now Pakistan could not receive the IMF loan without increasing the prices of petroleum products. In March 2022, the former PTI government gave a Rs. 38 billion subsidy on fuel, whereas, it planned to purchase oil from Russia at a 30 per cent less price as compared to the global market. It may be noted here that India is already purchasing oil from Russia at a lower price.

However, the coalition government declared the Russian oil claim only a fake story. Premier Shehbaz Sharif made “difficult decisions” one after the other, taking petrol prices to over 250 rupees a litre. The Pak rupee continued depreciating against the US dollar, taking prices of daily-use items to new heights. Now, the biggest issue for any government after the political turmoil settles down would be how to bring down prices, and how to absorb the costs of policy distortions that have crept into the system over the past few weeks. It is the history of the country that prices once increased seldom come down. Now, either people’s incomes would have to be increased by almost 100pc, or a revolution would have to be brought about on the economic front to slash the prices by the upcoming government.