Prime Minister Imran Khan has assured the nation that inflation is a temporary phenomenon, and speeding up work on CPEC will soon bring down food prices. Had the Export Processing Zones (EPZs) been speedily completed during the last three years, these would have provided thousands of jobs and some could have started exporting goods by now. But the PTI government put the CPEC on the backburner. Work on most of the EPZs was stalled. Despite being the epicentre of multibillion-dollar projects, Gwadar still lacks basic necessities like reliable access to water and electricity. It will be years before most of the projects start working at full capacity.
According to Mr Khan, the operationalisation of the Matiari-Lahore transmission line of 660 kV High-Voltage Direct Current (HVDC) will reduce line losses from 17 percent to four percent, resulting in the availability of cheap electricity for consumers. The claim may be true only partially. There are major problems that remain to be tackled, the circular debt which soared to Rs2.327 trillion in 2020-21 being one. The World Bank has reportedly conveyed its serious reservations to the top government authorities over their not honouring their commitment about an increase in electricity tariff in accordance with the February agreement. In case the government yields, this will increase industrial costs and make power more costly for the common man.
The country depends on the import of industrial raw materials, oil and LNG as well as edibles like palm oil, sugar, wheat and pulses. The prices of all these items are on the rise in the international market. Pakistan’s trade deficit is meanwhile piling up. A report published last month tells that Pakistan’s two-month trade deficit had widened 120 percent to $7.5 billion after imports saw a new historic peak but exports plunged for the third successive month despite heavy subsidies given to exporters and significant currency devaluation. The negative trade balance combined with smuggling of dollars to Afghanistan have brought down the value of the rupee with a US dollar costing more than Rs 170 and Fitch expecting dollar to reach Rs 180 in 2022. This will make imported essential goods more costly. On Thursday the government increased the petrol price by Rs 4 per litre which would translate into increases in the prices of virtually every consumer item. Inflation it appears will continue during the next two years of the PTI’s tenure.
