A sense of quiet despair hangs thick in the air. With Ramazan around the corner and Eid to follow right after, the inflation-weary citizenry must once again sit down for the depressing task of trimming their household budgets if they wish to continue to make ends meet. Even those who have been lucky to keep their heads above the water despite wave after wave of inflation will soon find it a challenge to stay afloat.
The average 33pc inflation forecast for the first half of this year by Moody’s is likely to prove a trial by fire for the majority of Pakistani households already facing rapidly depleting savings and a constant struggle to balance their books. “There’s still an inevitably tough journey ahead,” as Moody’s senior economist Katrina Ell told Reuters in a recent interview.
Low-income households will face an immense burden since much of the inflation is now being driven by non-discretionary items like food. “Food prices are high, and they can’t avoid paying for that, so we’re going to see higher poverty rates as well feed through,” Ms Ell noted in her interview.
The State Bank is also likely to continue jacking up interest rates to combat the surging inflation, which means that borrowing costs will skyrocket and create additional pressure on domestic demand. The most frustrating aspect of these painful adjustments is that they may still not be enough to get the country out of the hole its financial managers have gotten it in.
While we may justifiably point fingers at Finance Minister Ishaq Dar for his disastrous mismanagement of the economy in the past few months, as well as the State Bank for failing in its task of acting as a force of reason in that same period, the roots of the problem go much deeper.
The ravaging of the Pakistani economy has been wrought by fiscal malfeasance at the highest levels of power. The country has for years lived well beyond its means, hooked onto its calamitous spending habits by a section of the elite that continues to grow fat preying on its people’s future. Even today, while the vast majority is being forced to give up a pound of flesh for their rapacious decisions, they remain insulated from any real pain.
Attention must be brought to the fact that the ‘mini-budget’ recently unveiled by the government has done nothing to extricate the economy from their fell clutches. There is not even a hint that those currently in power are even contemplating dismantling the network of subsidies and privileges that exists solely to benefit the country’s elite to the tune of billions of dollars every year. This is the greatest betrayal that the Pakistani people must hold their leaders to account for. All else is secondary.
Published in Dawn, February 17th, 2023