Amid rising economic and political turmoil, the government has jacked up the price of petrol by Rs 5 per litre yet again; this time, ahead of Ramadan, a move that seems designed to bury the poor who are already stumbling under the weight of crushing inflation. Particularly hard-hit by the war in Ukraine, the country has been forced into a bidding war over scarce liquid national gas that it has been unable to afford. Banks have stopped financing and facilitating payments for imports due to depleting foreign exchange reserves, signalling serious trouble for the energy sector.
While the government has long denied claims of a fuel shortage, the recent increase in prices is evidence to the contrary. Oil traders have shunned countries like Pakistan due to an acute shortfall of foreign exchange. Industry players are having trouble opening letters of credit to do business as usual. Yet, the government appears naively cavalier about all this-the Oil and Gas Regulatory Authority has downplayed the fuel concerns. Even the State Bank of Pakistan has refused to comment on allegations that it isn’t being issued Letters of Credit.
The oil crisis has only compounded Pakistan’s balance of payments problem with the rupee weakening to a record low in recent weeks after foreign exchange companies were allowed in January to remove a cap on the exchange rate. The market-determined currency exchange rate is a key demand for the IMF but at what cost to the poor? The IMF’s prescription suggests the hardest choices on taxation and non-taxation fronts to fill Pakistan’s glaring fiscal gap.
Economic pressure has begun impacting the average Pakistani’s most fundamental needs. Nationwide blackouts, 40 per cent inflation and a debt-ridden economy with no solid political leadership and a self-absorbed elite. While much of Asia has gradually become rich and stable over the last few decades, Pakistan remains volatile, chaotic and most crucially, poor. Pakistani leaders are too busy posturing for the elections or inciting the public to care about the things that really matter-the present crisis has been brewing for a long time, and the Ukraine war is simply the straw that broke the camel’s back. *