The government can blame external factors like high commodity prices or IMF’s conditions like withdrawal of subsidies and hike in electricity and gas rates, even recent floods for disruption in food supply chains, for record breaking inflation – at 38 percent in May – but the people will still hold it responsible for their misery, and rightly so.

It was rising prices and slowing growth which prompted the PDM (Pakistan Democratic Movement) coalition to move the no-confidence motion against the PTI (Pakistan Tehreek e Insaf) government last year, after all, back when an inflation rate of 13.4 percent seemed unbearable.

Now, however, with GDP growth expected to drop near zero, perhaps even enter negative territory, and inflation breaking all records and still showing no signs of slowing even though SBP (State Bank of Pakistan) has raised interest rates to the highest level ever as well, at 21 percent, the government seems to have no idea what to do; that too in an election year.

It’s true that meeting IMF’s harsh demands added fuel to this fire, hitting people very hard and burning much of the government’s political capital. But it’s much worse that it has nothing to show for it at the end of the day and there’s still no telling when, or even if, the EFF (Extended Fund Facility) will resume.

This uncertainty has played a big part in the loss of confidence in the Pakistani economy that has sent the rupee tumbling, stoking inflation and bloating the national debt at the same time.

But that does not mean that the finance ministry’s own incompetence has not been a big contributor also, especially since Miftah Ismail was thrown under the bus and Ishaq Dar asked to return and resume his obsessive interference in the money market to artificially, and very unsuccessfully, prop up the rupee.

Shamim Jafri (Karachi)

Copyright Business Recorder, 2023