EVER SINCE it came to power, the coalition government has been navigating a difficult path. Given the fragile economy it inherited from the previous government, amid speculations of an imminent default, the coalition, led by the PML-N, has had little to no room to protect people from economic hardships resulting from the painful decisions it has been forced to take to fix the deep economic imbalances in the last three months. Its job is made even more difficult by the IMF whose support and bailout package Pakistan direly needs to avoid defaulting. The crippling increase of Rs7.91 per unit in power prices, which boosts the national average electricity tariff to Rs24.82 per unit from the existing Rs16.91, from July, is just one of several unpopular decisions — that include the reversal of fiscally unsustainable fuel subsidies and the imposition of massive taxes in the budget — the government has taken in order to obtain dollars from the IMF and other multilateral and bilateral creditors. In doing so, the coalition partners have lost much political capital as was manifest in the crushing defeat of the PML-N in the by-elections in its bastion of Punjab.

That the new electricity prices are going to unleash a new round of hyper-inflation, which is projected to average above 20pc during the present fiscal, is an understatement. Crushed by multi-year high energy and food prices, the new wave of inflation is going to badly hit low- to middle-income families. With living becoming unaffordable for most of us, the possibility of political and social unrest cannot be ruled out. The worst part of the story is that the economy is not showing any sign of stabilising even after subjecting people to such pain and the conclusion of an agreement with the IMF. The ‘relief’ that might have come in the wake of declining international energy prices has been eroded by an unprecedented drop in the value of the rupee in the last three months and a deepening of the economic mess thanks to the ongoing political circus. The situation has come to a point where no party or government can salvage it single-handedly in the foreseeable future. If the economy is to turn around and the hardships of the inflation-stricken people lessen, the politicians will have to sit together and learn to tackle their differences in a civilised manner within the ambit of the Constitution.

Published in Dawn, July 25th, 2022