EDITORIAL: Spare a thought for the caretaker setup. Their only fault, after all, is being in the wrong place at the wrong time. Most of them are not career politicians, so none among them may be in it for the long haul.
Besides, everybody knew that the first pound of flesh – agreed in return for the SBA (Stand-By Arrangement) in the dying days of the PDM (Pakistan Democratic Movement) government – would become due just about now.
Yet the shock of inflated electricity bills issued in August, at a time of already record inflation and unemployment, has caused such a stir that a rattled caretaker setup is scrambling to come up with an official narrative.
It’s important to do this step by step. Let’s not forget that the economy is only in as deep a crisis as it was before this seemingly temporary setup took charge.
Power sector problems that are the root cause of these bloated bills, especially the circular debt, stem from years and decades of mismanagement, incompetence, corruption and outright theft; and nothing was done or could have been done in the last fortnight to magnify them any further.
Markets and businesses alike cheered when the then PM, Shehbaz Sharif, clinched the SBA just when the EFF (Extended Fund Facility) was lost, but the optimism slowly, and quite naturally, began to subside and the hard reality dawned once the SBA conditions came out in the open. And now we have a bloodbath in the markets, extreme pessimism in businesses, and simmering ire ready to explode in the public domain.
The facts and allegations about certain segments enjoying free electricity also need to be put into context. It turns out that common perception that senior members of the military and judiciary enjoy the luxury of “free electricity” isn’t entirely correct.
While certain individuals are granted exemptions in accordance with their positions, their departments duly make all payments and not much is taken “free” from the system. This difference is important to understand in the noise created by all the anger at the grassroots.
Wapda and Disco employees are indeed entitled to free units, but we’re told that efforts are already under way to trim this facility. Furthermore any attempt to withdraw this facility altogether may end up in courts as the law stipulates that a benefit once given cannot be withdrawn unilaterally.
This caretaker government has a unique dual mandate – holding the elections as well as maintaining the IMF programme in letter and spirit. It is no surprise that the optics surrounding the latter are proving difficult to manage right from the start.
No doubt it’s a very painful fact – yet one that all Pakistanis are familiar with by now – that it is necessary to stick to the bailout program to avoid hyperinflation and default not long down the road. And since the slightest mention of subsidies and/or tax breaks is now known to end IMF help immediately, there’s no question of the government finding any fiscal space for the people anytime soon.
It’s clear that the administration has its hands tied for a reason. The same would be true for any elected government in its place. Still, the caretaker prime minister has promised “policy options” that will be announced shortly. Considering the circumstances, and the tight fiscal space, it cannot be anything more than cosmetic relief for the worst off. Because, there is simply nothing left in the kitty.
Even promises from friendly countries to bolster reserves and give some confidence to financial markets are taking their sweet time being fulfilled.
The caretaker finance minister has been very forthright and candid, though it would have been better, had she been briefed by her team to be not so straight forward in her remarks so as not to appear insensitive to the plight of the public, but the sad fact is that people will, somehow, have to “manage expectations”.
At least they now have a better idea where the elected representatives of the last few cycles have left them. They, too, should demand a clear plan of action, just like the IMF, forcing politicians to take their votes just as seriously as the lender’s bailout dollars.
Copyright Business Recorder, 2023
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