Pakistan Cannot Escape Rules of Economics

On Thursday May 26, the coalition government led by Prime Minister Shahbaz Sharif announced an increase in prices of petroleum products. Finance Minister, Miftah Ismail, made the announcement at a press conference in Islamabad explaining that the decision had to taken to ensure the revival of the International Monetary Fund (IMF) program.

This decision had a positive impact on the market with the rupee and stock market stabilizing. The policy decision will also remove a major hitch in the way of concluding a staff-level agreement with the IMF.

At the recent Doha talks the IMF had refused to revive the $6bn program “without the removal of the fiscally unsustainable fuel and electricity subsidies and had given Islamabad two days to lift the cap for the continuation of talks.”

As an editorial in Dawn noted, “That the Shehbaz Sharif government, which had been reluctant to enhance fuel prices despite the consistent rise in global oil markets out of fear of a political backlash, has finally decided to lift the price cap shows that it feels politically more confident to take tough and unpopular decisions to tackle the economic crisis.”

However, the increase in fuel prices “is only the first step towards saving the economy as both the IMF and State Bank want the government to not only transfer the entire burden of global energy prices to the consumers but also recover the full amount of GST and petroleum levy in the next fiscal year. Once that condition is fully met, chances are that the IMF will enhance funding under the program and extend the arrangement through June 2023 for fiscal consolidation in the country.”

Hopefully, Shahbaz Sharif will continue to govern based on this recent statement “we cannot let the state sink for the sake of politics.”

Author: Nadia Khalid

Latest articles

Pakistan Must Allow Effective Local Governments

Devolution and decentralization are key to democracy and democratic governance in today’s day and age. In Pakistan, unfortunately, the state is reluctant to allow...

Army has started its catharsis. Will political parties do introspection too?

In his last public speech before retiring on November 29, outgoing army chief General Qamar Javed Bajwa chose to speak about the legacy of...

Pakistan Gets New Boss as its Army Gets New Chief

It is said that most countries around the world have armies, while the Pakistan army has a country. In Pakistan, people may not care...

China Helping Pakistan in Baloch Genocide

The Pakistani state has long viewed any calls for ethnic or linguistic diversity as subversive and anti-national. This has meant that any demands by...

Related articles

Author: Nadia Khalid