Why do you think the only thing to come out of emergency cabinet meetings – to do something about these protests over inflated electricity bills, of course – is the same old option of letting poor, wretched, protesting consumers pay in installments? It’s because that’s all they’ve got.
You don’t really have to be a power sector or even government policy expert to understand that the caretaker setup has zero leverage here. It could, for example, provide immediate relief – subsidies, tax/levy cuts, etc. – but even if it has the constitutional cover to do so, it would be at the cost of the IMF bailout program and a much worse fiscal crisis, complete with hyperinflation, worse unemployment, possibly default and bigger and bloodier protests just around the corner.
It could go a step further and mobilise the finance ministry to make up for power sector relief by putting the squeeze elsewhere; getting more creative with indirect taxes, for example. But, even if the Fund agrees, what good would it do to cajole angry protesters back to their homes only to force them onto the streets again with a vengeance and an added sense of betrayal?
Or it could simply admit that it’s helpless in all this, that it has no policy space because of the ironclad agreement with the IMF – how do you like the SBA (standby agreement) now? – and factor in whatever harm protesters will do to themselves, their electricity bills and the country as a necessary correction, in market lingo, as the caretaker setup focuses on its number-one assignment – holding elections.
Right now, though, it can do nothing at all because something gave the information minister (read government) the idea that a phone call with the IMF would provide a roadmap to relief “within hours”. Now it must first wipe the egg off its face and follow protocol by submitting its request in writing, then wait for the Fund’s board to find time to fit it in its agenda, and then wait longer yet for a (most likely) rejection.
Meanwhile, barring a miracle, the deadline for August bills will pass next week with most protesters having already burnt theirs after blocking roads and cursing the government. And if authorities feel that getting the IMF to agree to payments of the same (inflated) bills in installments will count as a win, then it’s just not reading the pulse of the people correctly.
This sort of implosion at the very bottom of the food chain occurs not when the average Joe doesn’t want to pay exploitative taxes any longer – everybody’s helplessly suffered all the corruption and mismanagement since forever – but when he/she/they simply cannot. That’s why layering the bills is a non-starter.
This space has repeatedly cited three statistics to warn of a furious mob revolt that these bills might just have triggered. Of the 195 countries in the world, Pakistan stands at number five in terms of population and counts in the top then in both poverty and illiteracy.
This is a very toxic mix in the best of times, but when you have record inflation and unemployment, threatening sovereign default the minute a harsh IMF program is suspended, you don’t need more than a cursory knowledge of history to know that even a small spark can light a very big fire of public discontent.
Especially when there’s so much discontented public (5th largest in the whole world), most people are poor and hungry, and they’ve started to (literally) run out of money.
This is just a case of the state never being able to, nor interested in, putting two and two together. It’s the fruit of an oppressive, parasitic social/political structure built around a cocooned, untaxed and undertaxed elite, too used to making up fiscal shortfalls by further taxing the already taxed, expecting the honest to forever pay for the theft and corruption of the dishonest.
And now it’s run its course. The elite is powerful and protected, but much smaller in number than the hordes that were first forced to pull their children from school, then struggled to put two square meals on the table, and now have no money to pay their bills; with nothing to suggest that anything will get better for any of them anytime soon. Soon, inevitably, some of them will begin to starve, as will their children, and that’s when no amount or manner of top-level assurances will be able to put a lid on protests, which will grow incrementally venomous.
The demonstrations over electricity bills, in clichéd terms, are just a symptom of a much deeper anger. Expect more poor people – who’re ordinarily too tied up to waste precious time protesting on the streets – to spill out when petrol prices jump again shortly. The poor have run out of money as well as options. The only thing left is revolt.
And so it begins.
Copyright Business Recorder, 2023