Déjà vu

Déjà vu
Winters are usually a good time for nostalgia. But not all kinds of nostalgia can be laughed off as tough-but-pleasurable moments - not when you know that you probably would have to re-live them soon, because like it or not, the winter of 2010/11 has started feeling like the summer of 2008.
Political objectives have started being further misaligned with the economic realities (not that they were always spot on in the first place), as the kursi-bacthao muhim has taken precedence over save the economy.
There are reports that the non-fuel component of power tariffs has been frozen despite IMFs condition against it, whereas local fuel prices have also been stayed through the executive order, despite the fact that global oil prices have been flirting with 27-month highs.
And though (thankfully) the local fuel price mechanism is still better than the one practised in June 2008, consumers are paying almost what they were back then. According to Ogras price list, a litre of petrol today costs around Rs73/litre, just shy of Rs76/litre in June 2008.
Aside from fuel, the other dangerous f-word: food is also fast getting beyond the reach of many. The FAOs food price index averaged around 180 points in the six months ending June 2008, whereas in the last six months it has averaged around 191 points.
The FAO food index has risen 32 percent since July, and for Pakistan, which is a net importer of food, it spells clear and present danger.
In the meanwhile, failure to revamp the sick public sector entities continues to drain Rs250-300 billion from the exchequer, just as it did in the summer of 2008.
Combined with other forms of mismanagement, the full-year fiscal deficit is seen rising to 7.4 percent by some quarters, a tad lower from the fiscal gap of 7.6 percent of the year ending June 2008.
As a consequence, the governments note printing machines have been well-oiled and are probably going to start working in double shifts soon.
Although, the government has recently paid off about Rs180 billion, partly with the help of CSF inflows, Rs90 billion worth of new notes were still printed in the half year ending December, and further money printing might be on the cards, if the government does not put its house in order.
In other words, if things go the way they are at the moment, and with inflation already in high double-digits, the economy could take two steps back come June 2010.