ANL 11.33 Decreased By ▼ -0.12 (-1.05%)
ASC 10.00 Increased By ▲ 0.20 (2.04%)
ASL 12.05 Increased By ▲ 0.70 (6.17%)
AVN 80.72 Increased By ▲ 2.42 (3.09%)
BOP 5.94 Increased By ▲ 0.11 (1.89%)
CNERGY 5.73 Increased By ▲ 0.19 (3.43%)
FFL 6.98 Increased By ▲ 0.01 (0.14%)
FNEL 6.35 Increased By ▲ 0.20 (3.25%)
GGGL 12.30 Increased By ▲ 0.15 (1.23%)
GGL 16.98 Increased By ▲ 0.16 (0.95%)
GTECH 9.67 Increased By ▲ 0.02 (0.21%)
HUMNL 7.06 Increased By ▲ 0.41 (6.17%)
KEL 2.69 Increased By ▲ 0.13 (5.08%)
KOSM 3.11 Increased By ▲ 0.11 (3.67%)
MLCF 27.71 Increased By ▲ 0.46 (1.69%)
PACE 3.15 Increased By ▲ 0.05 (1.61%)
PIBTL 6.17 Increased By ▲ 0.06 (0.98%)
PRL 18.00 Increased By ▲ 0.12 (0.67%)
PTC 7.80 Decreased By ▼ -0.35 (-4.29%)
SILK 1.30 Decreased By ▼ -0.13 (-9.09%)
SNGP 27.69 Increased By ▲ 1.60 (6.13%)
TELE 11.77 Increased By ▲ 0.01 (0.09%)
TPL 9.95 Increased By ▲ 0.06 (0.61%)
TPLP 18.42 Increased By ▲ 0.74 (4.19%)
TREET 30.00 Decreased By ▼ -0.10 (-0.33%)
TRG 81.50 Decreased By ▼ -0.18 (-0.22%)
UNITY 22.99 Decreased By ▼ -0.28 (-1.2%)
WAVES 13.65 Increased By ▲ 0.15 (1.11%)
WTL 1.58 Decreased By ▼ -0.02 (-1.25%)
YOUW 5.06 Decreased By ▼ -0.04 (-0.78%)
BR100 4,287 Increased By 53.9 (1.27%)
BR30 15,673 Increased By 186.7 (1.21%)
KSE100 42,954 Increased By 412.1 (0.97%)
KSE30 16,311 Increased By 167.7 (1.04%)

Pakistan is entering a near impossible situation. The country has probably never seen such weak political and economic conditions all at the same time. The government is a coalition of a number of parties, and they fear political backlash of unpopular (but much needed) economic decisions. Unfortunately, there is no luxury of time. Forex reserves are dwindling. There is no respite to global commodity prices. It’s a matter of weeks (not months) before the economy can no longer survive on its own.

All lenders are eying IMF’s (International Monetary Fund’s) nod before making firm commitments, and the IMF wants adjustment in energy pricing before staff level talks can begin. On the other hand, the government needs to bring coalition partners on board and desires to weaken IK’s popularity before undertaking these unpopular adjustments. All these cannot happen at once. The government must swallow the bitter pill.

The conditions today are difficult than what they were back in 2018. The new government at the time had a fresh electoral mandate and forex reserves buffers wasn’t as thin. Moreover, global commodity prices were not in a super cycle as they are today. Eventually, the government went to the IMF and had a deal. Moreover, the establishment and government were on the same page. The coalition government wasn’t as tenuous as it is today. And opposition didn’t have such strong teeth, as is the case today.

The objective of the PDM (Pakistan Democratic Movement) to form a new government was to oust Imran. The stated goal is achieved. Coalition partners such as PPP are not as interested in the performance of this government. Thus, they are not prepared to support unpopular decisions.

The buck stops with the PML-N leadership. Clearly, the architects of vote-of no-confidence move miscalculated. They may have had appreciation for tough economic conditions, but didn’t anticipate the backlash they had to face. It is not the popularity of IK, but the public outburst that is primarily fueling the resentment against the incumbents. That further hampers their ability to take difficult decisions.

There is no time to do politics. There is no time to put IK on the backfoot. There is no time to waste. The criticism against the PTI led government was that it was a ‘’selected’’ and incompetent one. One of the main objections was that it was not able to negotiate well with the IMF. It faced criticism for not dealing well with the energy mess such as failing to increasing the tariffs and petroleum prices. Now Sirs, you are in power. Please demonstrate competency by fixing the mess and earn public’s trust.

The import bill is growing out of control. The fiscal deficit is unsustainable. How can a weak government have the luxury to run large subsidies? The argument is that the PTI government has left landmines for the incumbents. Landmines are usually laid when the government is completing its five years (like it happened in 2008 and 2018).

PTI decided to freeze the petroleum prices on 28th Feb 2022. There was no (or little subsidy) at that time. On 8th March, VONC was presented. The subsidy increased to Rs 26-35/ liter on 15th March. And by next revision on 1st April, IK was a lame duck, and the subsidy had grown to Rs24-41/liter.

Then by 15th April, the new government was already in place and the subsidy had risen to Rs21-51/liter while there was no change in the pricing. Now the subsidy is running at Rs30-73/liter with no change. How can this be a landmine laid by PTI? The highest slippages have taken place in the last one month alone.

Unfortunately, no substantive economic decisions have been taken by the new the government yet. There is no decision on the new SBP (State Bank of Pakistan) governor. The petroleum pricing revision is pending. Time is running out fast. Pakistan’s food and energy import bill (including coal and LNG) has crossed goods’ exports. This is not sustainable. Actions must be taken soon.

It’s time either to act now or wait for the disaster. Saudi Arabia has made it crystal clear that there is no support without bringing the IMF on board. The UAE has a similar response. China is asking for the same. The World Bank and Asian Development Banks always wait for the IMF’s nod in days of low SBP forex reserves (less than three months cover). Even China-led Asian Infrastructure Investment bank (AIIB) is not ready to help without the IMF. All the roads lead to the IMF. Act now without any further loss of time.

Copyright Business Recorder, 2022

Author Image

Ali Khizar

Ali Khizar is the Head of Research at Business Recorder

Comments

Comments are closed.

Ahmad May 09, 2022 09:04am
Good analysis
thumb_up Recommended (0)
Khawar May 09, 2022 12:06pm
Who has created this whole mess?
thumb_up Recommended (0)
Khawar May 09, 2022 12:07pm
Who has created this whole mess?
thumb_up Recommended (0)
MALIK DAOUD KHAN May 09, 2022 01:30pm
A very good article. In the UK we are paying the equivalent of PKR 390 Rs, per litre. In Pakistan I think now your paying around PKR 160 Rs, per litre. Driving motorbikes and cars is considered a luxury in the west. Charge everyone the real price and add tax on it.
thumb_up Recommended (0)
Shahzad Ahmad May 09, 2022 01:35pm
Does that mean that if IK hasn't been ousted, the situation would not have been this critical provided the government would have taken the prices up? Seems like a blunder by PDM at this point in time to oust PM. Hadn't they done that, IK would have lost his popularity after completion of his tenure, isn't it?
thumb_up Recommended (0)
Jamal May 09, 2022 02:10pm
1۔ قوم سے معافی مانگو پیسے واپس کرو اور نئے فورئ الیکشن کا اعلان کردو۔ عمران اور فوج اور دیگر اداروں میں مثالحت کرائو عوام سے مدد مانگو۔ ڈٹ جائو اور پیٹ پر پتھر باندھو اور سنت ادا کردو
thumb_up Recommended (0)
Hajra Gohar Warraich May 09, 2022 04:18pm
This article is an eye opener for all those who are responsible for bringing these mafias in the government/ power. Now where are all those who backed this regimen change operation???
thumb_up Recommended (0)
Shahid Mahmud May 09, 2022 05:39pm
Well researched piece but needs more editing for grammar. On the content and theme, if I am not mistaken, the new government is only a week old. The “mess” has been in the making for decades, only getting worse during the previous government. If the new government achieves even a modicum of stability, that would be an accomplishment. The junior Sharif is a hard-worker and a proven manager despite a checkered record in financial ethics. He should be supported and given an opportunity to mend the broken national finances.
thumb_up Recommended (0)
Javaid Sultan May 09, 2022 06:32pm
Perfect analysis of current situation. As such there is a need to take immediate steps to control the financial and economic situation without any delay. Moreover. in order to overcome the political situation fresh mandate of the people of Pakistan should also be taken.
thumb_up Recommended (0)
Yasir Qurban May 09, 2022 07:44pm
@Shahid Mahmud, sir, not at all Mr. Shehbaz is competent to the extent of construction of bridges, roads, metro's he can only be a contractor who has built white elephants like metro's, orange line train etc. They ever never done a financially neutral project. Now the only solution is early election.
thumb_up Recommended (0)
Zafar Abbas May 09, 2022 07:46pm
All are facts but what is the suggested solution? Act now, act what? Everybody knows these facts, but solution lies only on oil and gas imports from Iran. No other option is possible to try.
thumb_up Recommended (0)
Qaisar May 09, 2022 09:16pm
I wouldn't call this an article but narration of the situation only gathered from daily updates and that too on biased mode. There is no doubt that all this is because of sheer incompetence of previous regime. I can detail the wrongdoings of last government on economic fronts but will short of space. I agree with one content above that IMF negotiation shall pave easy
thumb_up Recommended (0)
Qaisar May 09, 2022 09:21pm
I wouldn't call this an article but narration of the situation only gathered from daily updates and that too on biased mode. There is no doubt that all this is because of sheer incompetence of previous regime. I can detail the wrongdoings of last government but will fall short of space. IMF program on which country is dependent now was also poorly dealt by last government. As mentioned above, if IMF is well negotiated all will be fine so we should expect and wish that it will be dealt with well. I agree with one stance that time is of essence and earlier the better.
thumb_up Recommended (0)
Ali Ahmed May 09, 2022 11:38pm
@Khawar , this mess is partly the fault of previous govts attempt to help the public through fuel subsidies but the major impact comes from rising commodity prices due to the Ukraine war which is impacting all countries across the globe
thumb_up Recommended (0)
Amin May 10, 2022 12:07am
It is a good question, who created the mess and the reason for withdrawals from FE a/c. Canada is the 3rd largest oil reserves and still we are paying $2.17/L as per my last filling. That translates to PKR 336 minimum what a luxury and most of bigger gas guzzlers are driven by MNA MPA smugglers drug dealers etc who does not pay a single paisa in taxes
thumb_up Recommended (0)
Kamal May 10, 2022 12:15am
Stop. default. And let the worst play it out. We want blood to flow before oil to avenge the sins of our fathers and the elite. Time to pay up.
thumb_up Recommended (0)
Rehman May 10, 2022 12:15am
@Qaisar, sheer incompetence.. wow. And the current already tested shoved upon corrupts are the better choice!!!
thumb_up Recommended (0)
Imran May 10, 2022 08:36am
@Khawar , PDM
thumb_up Recommended (0)
Imran May 10, 2022 08:36am
PDM and it’s supporters
thumb_up Recommended (0)
Imran May 10, 2022 08:38am
@Shahzad Ahmad, اب پچھتاوے کیا ہوت
thumb_up Recommended (0)
Imran May 10, 2022 08:39am
@Shahid Mahmud,
thumb_up Recommended (0)
Imran Afzal May 10, 2022 09:27am
@Khawar , This is an internatioal market trend and need quick and correct disissions instead of blame game.
thumb_up Recommended (0)
Shahab Ghani Khan May 10, 2022 10:21am
When will we have a Government with Leadership who will not lie to the masses. Are we going to be hostage to IMF ? While past present leaders live in luxury
thumb_up Recommended (0)
Tariq Aziz Memon May 10, 2022 02:15pm
جب حکمرانوں کے سوچ positive ہوگے عوام بھلا سوچیں گے تو کوئی مسائل نہیں رہے گا، ھمارے پاس وسائل کے کمی نہیں بس ایک نیک دل حکمران کے ضرورت ہے جس کے قول اور فعل میں تضاد نا ہو ھمارے آرمی دنیا کے بہترین افواج ہیں، ھم پر امید ہیں حالات یکساں نہیں رہتے، سب کو نیک نیتی سے اپنی ملک کے بھلائی کے لیے کردار ادا کرنا ہو گا، جزاک اللہ خیرا
thumb_up Recommended (0)
Javed Awan May 10, 2022 02:48pm
I totally agree with Khizer. Actually our greedy lot of politicians in incumbent Govt are only interested in dismantling their Cases if corruption based money laundering. The first step taken was to transfer FIA's officers who investigated these scams like Maqsood Chaprasi. It is irony that they were sworn in the day fixed for indictment. Our institutions are supported this ugly move in a ill designed manner and defamed themselves publicly. Now only solution is to hold free and transparent General elections immediately and formation of a tech government having no political designs.
thumb_up Recommended (0)
Rahim May 10, 2022 03:22pm
@Kamal, Dear, I assume you must be living outside Pakistan. And I cannot abuse my father like you do. The writer is suggesting possible, workable solutions to this mess other than bloodbath that likes of you are constantly chattering about.
thumb_up Recommended (0)
Mumtaz Ahmed May 10, 2022 10:04pm
IMF accepts or not, we can not afford to increase the tariffs for utilities, specially for power, gas & petroleum products. Come what may, we should try to decrease the tariff, instead ! Cost of doing business is already very high in Pakistan, any increment will not only be detrimental to growth, in reality it will eliminate many economic sectors specially those where the demand is elastic, and public to leave buying those things, because of higher costs / increase in respective prices. We need to find alternatives ! We need to cut down all our expenses of non-essential products, not only at personal or individuals levels but also on official / government levels as well. This is imperative. All state level functions, should continue to take place if really necessary, but no refreshments and meals should be allowed. Economic emergency should be declared, immediately; imports of cars, edible products luxury items, be banned for good !
thumb_up Recommended (0)
Imaan May 10, 2022 11:13pm
Save Pakistan from being sacrificed to the opposition i.e, pmln, ppp, pdm, mqm etc's malice. Pakistan is very precious, we have already lost a gem of a PM to these greedy hands, bit let's make sure to save our country from them in time. Then we have to restore our true leader
thumb_up Recommended (0)
Hassan Ali May 10, 2022 11:44pm
@Qaisar, I don’t think you understand what the previous government has had to deal with since it took over in 2018, the country was in debt, tied in to contracts that were extremely expensive no doubt thanks to kick backs PML-N had received. Then we had Covid what are you expecting from Imran Khan ? Miracles!!! He didn’t line his own pockets whilst in power like previous governments have done instead he reduced expenses to pay debts off. Something to think about which government has collected the most taxes, most remittances from overseas Pakistanis, most exports, and all this whilst having to deal with Covid. I could go on and on but there is plenty in this message for you to think about.
thumb_up Recommended (0)
Mumtaz Ahmed May 11, 2022 12:38pm
When we start indulging ourselves in the debate what the previous government did & what the previous governments did earlier, we never focus on today’s situation. Please come out of this state, see what do you have now and what best you can do with those. Chadar dekhain, chadar, all the time and then consider stretching yourself !
thumb_up Recommended (0)
Zahid Sheikh May 12, 2022 04:26pm
A precise and well-ellaborated landscape sketched by the author about Pakistan's political economy heading to sociopolitical and socioeconomic jeopardy in one go and in a weeks time. Desperately need an amicable wayout strategy ..
thumb_up Recommended (0)
Syed Zulfiqar Ali May 13, 2022 10:23am
Unity for Pakistan is need of the day, stop blaming each others.
thumb_up Recommended (0)
Moen Aslam May 13, 2022 10:01pm
I agree with you that current popular activist sentiment is not all IK driven. It had been bottled up for 7 decades. I think IK gave accurate voice to their feelings. This needed to happen for a Pakistan with a future. Pakistanis needed to reaffirm their unequivocal, clear-view, committed love for their country un-distracted, unencumbered by religious fanatics religiosity...My take on the present concocted gov is not hopeful that they act for the country in a calm and collected way overwhelmed by fear for circumstances surrounding them.
thumb_up Recommended (0)
Merry May 15, 2022 10:18am
Thee official Casino guide to 2022 edu
thumb_up Recommended (0)