LIKE previous political governments, Prime Minister Mir Zafarullah Jamali’s government has also started violating various understandings reached with the international financial institutions (IFIs).

Under such circumstances, will it be possible to continue receiving uninterrupted foreign assistance, specially when the World Bank has publicly sounded strong warning to the new government against violating various accords and commitments?

The Jamali government, in a major policy shift, announced the reduction of across the board power tariff by 12 paisa per unit, reportedly without taking into confidence the donors’ representatives. The prices of electricity were reduced even without taking the case to the National Electric Power Regulatory Authority (Nepra). Ironically, Nepra announced power tariff cut by Rs0.12 per unit on Dec 19, a few days after the cabinet announced this decision. Why the issue was not taken up with Nepra before the cabinet decided in the matter remains an important question.

Officials of the ministry of finance were apparently bypassed by those close to the prime minister to cut power tariff with a view to offering so-called relief to the people. The Minister for Information, Sheikh Rashid, had also said while briefing reporters following the first cabinet meeting that prices of items like gas, petrol, atta, water, etc., will be reduced. He also said that prices of drugs will be brought down, The government is said to have decided to take the issue of power prices to Nepra after the donors raised objections. Now it is to be seen whether the government would further reduce the prices of other items as proposed by the minister for information.

While the IMF was not reportedly happy over the new government’s decision to offer relief in the shape of reduced power tariffs, the World Bank expressed serious concern over the authorities’ failure to get the environmental and resettlement agreement relating to Ghazi Brotha hydro project implemented. The bank warned that further failure to comply could result in the suspension of aid and cancellation of the loan.

Another issue which could also cause problems with the donors is the new government’s decision to offer Rs3.5 billion to the federal legislators to undertake development work in their constituencies. According to some officials of the ministry of finance, there was no budgetary provision for this Rs3.5 billion new funding and that it was still to be identified. Will the government cut the development budget to offer this Rs 3.5 billion to the MNAs? Assurances had been given at the highest level that there will be no cut on development budget which had been increased from Rs116 billion to Rs166 billion during the last three years period.

People in the donors community do apprehend that the political government would not be abiding by the commitments earlier made by the Musharraf administration. It is also feared that corruption which had been contained at higher level during the last three years could reappear because of what is being termed “change in priorities of the new government”.

“In principle, Gen. Musharraf should ensure that there is a continuity of policies and the new government does not do any thing which hurts our relations with Pakistan”, said an official working in one of the local donor agencies. He said that the donors’ relations with Pakistan will be strained in case the new government decides to further cut the tariff of various utilities. He said that the financial health of WAPDA and KESE need to be improved by allowing them to raise their tariff rather than reducing them.

The officials of WAPDA and KESE also maintain privately that this was not the time to reduce electricity tariff as it will further create funding problems for them. “The government had offered, few weeks ago, Rs 15 billion each to WAPDA and KESC to help improve their financial health but this objective might not be achieved because of the new reduction in power tariff” an official said.

Generally, it is also said that the government should have offered the reduction in tariff only to the domestic consumers and not all the industrial, commercial and agricultural consumers to avoid problems specially with the donor agencies.

A senior official of the ministry of finance when contacted said he did not see any problem with the donor agencies over the reduction in electricity prices. “We will take them (donors) into confidence over the issue”, he said conceding that perhaps it was the political expediency of the new government to offer some relief to the common man.

Prime Minister Jamali is believed to have said in one of the meetings with his close associates that he needed to give more relief to the people but did not know how to do that. The officials of the President House have reportedly conveyed to the officials of the Prime Minister’s Secretariat that the continuity of policies will have to be ensured and that no decision should be taken which is not in line with the commitments and understandings earlier reached with the donor community. However, it has to be seen, whether it happens or not, because the elected government has its own compulsions to make people happy either through mere rhetoric or by doing some thing concrete for them.