EDITORIAL: It beggars belief that the government thought this was a good time to approve 15 development projects worth Rs515bn, including a $900m loan “to address climate change”, when it should be taking the lead in belt-tightening and exercising fiscal prudence. So much for the promise that it made when it took over after a widely disputed election, that it understood what kinds of sacrifices were needed to rescue the economy.
And, to add insult to injury, it’s also proposed to spend Rs8.6bn programme to construct 104 more family suites for members of parliament and their staff; as if they weren’t lavished with enough perks in the budget, in stark contrast to the austerity that is being forced on common people. All this makes for bad policy, bad economics, bad politics, and very bad optics.
For, just the other day the prime minister claimed that he understood the people’s pain, once again promising to cut runaway utility prices. But these stunts no longer wash with the people because his actions do not back his fancy words.
Remember, people are burdened with the worst economic crisis of the country’s history for no fault of their own. They are forced to pay record high taxes and endure record inflation and unemployment because the ruling elite’s lopsided policies bankrupted the country.
Yet, even as the screws are tightened on them, they must also endure headlines about the government throwing money around, still favouring the ruling class that lives in its own sweet bubble.
One would have thought that the increasingly tough conditions of the IMF, and the political capital they would erode, would be a sobering experience for the ruling party.
Yet even before the EFF (Extended Fund Facility) is officially sanctioned, it’s clear that the government is either unwilling or simply incapable of exercising the kind of fiscal discipline that is going to be needed for a long time.
Hopes of an overhaul at the finance ministry under a seasoned banker familiar with international financial markets have also been properly crushed.
Where does all this leave the people? They must endure considerable degradation of their lives to keep the government solvent on an IMF lifeline, but the government is not prepared to make the kind of cuts that the treasury needs.
This is also one of the most politically turbulent phases of Pakistan’s history. This government has struggled for legitimacy since its first day in office, yet it is still taking steps that will erode what little is left of its credibility.
Its actions betray a frightening divorce from reality. History is full of examples of the ruling class’s disregard for on-ground facts and trends causing rupture in societies.
The real test will come in the months and years ahead, when the EFF is implemented along with all its harsh “upfront conditions”, which mean more and more tax money for ordinary people to cough up.
About half the country hovers just around or below the poverty line, which means the financial trauma from the structural reforms will break millions of households.
The government must immediately revisit its policies and its approach to the real economy. Its departments should be working overtime looking for ways to trim the budget, not sprinkling more money on ministries and taking on expensive loans when they are not needed.
It’s also been reported that the government has started aggressively buying dollars in the local market because its weak credit rating has effectively cut it off from most international financial institutions.
Hopefully, it will realise its mistakes and cut back on unnecessary spending and debt on its own, before it is made to see the light by the rising fury of the people.
Copyright Business Recorder, 2024
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