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Chessboard challenges

57 16 24
08.05.2022

AS the PML-N-led coalition government completes five weeks in office, there are few hints of the shape its policy responses will take to tackle the dire state of the economy, worsened by rising global energy prices, runaway inflation and an alarming trade deficit.

In fact, there are contradictory signals coming about the Rs2.5 billion a day fuel subsidy, given in February this year by the PTI government in a desperate last-ditch attempt to hold on to power when it sensed the incoming challenge.

Finance Minister Miftah Ismail has stressed how much the subsidy is costing and the hole it is creating in the national coffers but, at the same time, he says Prime Minister Shehbaz Sharif has shot down any increase in fuel prices because of its inflationary effect on the poor.

Of course, this is just one aspect of a multidimensional crisis but the financial-economic managers of the new government will be assessed on the basis of how they deal with the fuel subsidy so that their IMF programme commitments, as well as public support, stay intact.

The government seems to be wasting its time on non-issues.

The IMF has been clear the subsidy has to go and what’s been spent on it since February has to be recouped. But the IMF does not have to go back to the public for a fresh mandate in 19 months. Only the government can calibrate the blowback from, and the true cost of, more pain inflicted on the poor.

When the coalition came together, many of its leaders including PPP........

© Dawn


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