EDITORIAL: It’s about time the government seriously considered reduced working days and other ways of rationing energy as well because unless some out-of-the-box arrangement is implemented very urgently to bring down power and oil consumption, the economy will simply implode.
It turns out that the power division recommended that the new government cut working days as soon as it was sworn in.
But the prime minister had planned to introduce his famous ‘Shehbaz speed’, which worked very nicely during his long year as Punjab chief minister, to the federal government as well and instead increased the official work-week by one day and even demanded that government employees show up earlier for work.
That might have been workable had the government had the political will to bite the bullet and remove the controversial subsidies, allow prices to rise and eventually help the rupee and the current account recover some lost ground.
Yet it’s been too insecure about the time it will be allowed in office to begin burning its own political capital for the greater good so soon. The only practical way of bringing down the energy bill for the time being is an engineered demand destruction; or at least plenty of reduction.
SBP (State Bank of Pakistan) has prepared estimates, based on three different scenarios of reducing working days, that are expected to save anywhere from $1.5 billion to $2.7 billion every year. One proposal has four working days and three holidays in which retail business will remain open.
The second one has four working days, two holidays and one day of lockdown. And the third has four working days, one holiday and two days of lockdown. The third one is rightly being considered a little too aggressive, so there’s a good chance that one of the first two options will be accepted as official policy for the immediate term.
The current account does not have much to celebrate despite exports and remittances breaking records this April; the former staying above $3 billion for the second consecutive month and the latter rising above $3 billion in a month for the first time. Already the oil import bill for 10 months of the ongoing fiscal (Jul-Apr), at $17 billion, is 96 percent higher than the same period of last year.
And with no more aid till the IMF programme is in limbo, the international commodity super cycle still playing out, and political uncertainty spooking financial markets and driving away foreign investment, the reserves position is in extreme danger.
Usually, such situations require more people to put in more hours of work every day to push the economy forward. But in our particular situation, when reducing oil expenditure is of primary importance, exactly the opposite needs to be done.
And they’ll have to do more than just reduce working days to make this strategy of energy conservation work. They will also have to adjust daily working hours, especially for retail outlets, to get most of the business done during daylight hours. Reducing the number of public functions, as well as the number of people allowed in them, would also be a good idea.
All this is not at all desirable, but very important. Yet even if this strategy is adopted and followed to the letter, it will only give very little extra elbow room. The government will still have to carry out reforms that will have structural improvement to show for all the pain that everybody must go through because of them.
Copyright Business Recorder, 2022
Comments
Comments are closed.