Daily Times

With spiralling power bills surpassing the average rental rate for homes for a large majority in Pakistan, it is no wonder that the government saw fit to introduce relief measures. But what to do when its hands are tied and standing at the edge of the precipice means one has little option but to follow the IMF’s diktat.

Contrary to what the Punjab government may have us believe, swirling reports in the media suggest the Fund has clear objections to “fiscally reckless” decisions and has demanded an end to the temporary subsidy introduced by the Maryam administration in Punjab. The implications of these actions on a political party that has been striving to appease its electorate with schemes like a Rs 700 billion solar panel distribution program and a historic Rs 14 relief per unit are yet to be fully understood.

Given the circumstances, it is no surprise that the state is working diligently to create as much leeway as possible, as a failure to do so would erode the hard-earned increase in confidence. PM Shahbaz Sharif may have patted his cabinet’s back for efforts to bring down the inflation rate to 9.6 percent this month, but he too must know that the credit for this largely goes to the ease provided by a decrease in electricity prices, which in turn, has influenced the case for changes in the interest rate in the Monetary Policy.

Reverting to prior levels would inevitably lead to higher headline inflation in the coming months; subsequently delaying the rate cut, and adding to the debt servicing costs. It has been repeatedly emphasised that lasting relief can only be achieved through improvements in the governance model and concerted efforts against the prevalent issue of electricity theft instead of taking the perilous road repeatedly.

Isn’t it high time for the authorities to improve their standing in the eyes of the Fund by reducing non-developmental expenditure so that targetted subsidies have a greater chance of approval? *