The crash of the stock market on Thursday, when the benchmark KSE-100 lost 1750 points to close below 44,500 points showed that more attention was paid to the continued side of the rupee, which hit another low at Rs 305.55, than to caretaker Prime Minister Anwarul Haq Kakar’s promise to announce relief measures for electricity consumers in two days. Much of the steam of that announcement by Mr Kakar’s caveat that all international lenders. What little, if any, was left will be taken out by the expected hike in fuel prices. As if all of that was not enough, it seems that The State Bank of Pakistan’s Monetary Policy Committee is to be summoned ahead of its scheduled meeting, which will raise the interest rate prematurely, even though it is already at a record level. This not only reflects the sort of control the IMF exercises (raising the interest rate was a deeply held desire), but also makes nonsense of the whole MPC iea, which is meant to reduce arbitrariness and assure businesses that the interest rate will remain the same for a fixed period of time. It may brith fact that hiking interest rate has failed to tame inflation so far, and as nothing else has changed, there is no reason to assume that this measure will change anything.
The country is on the edge of a precipice, where default seems a minor problem. The power sector is already facing financial difficulty in the shape of the circular debt, and is not likely to be able to sustain the effect of the mass defaults that may follow the current bills, and the ones after that. If the entire power sector goes, it will mean that those who somehow paid their bills will also be left in the dark.
The original plan of holding elections as late as possible now seems not just unconstitutional but unviable. It is not at all certain that an elected government will have solutions, but it is certain that the caretaker government does not. The only feasible solution is to hold elections within the constitutionally prescribed 90 days and let the newly elected government take what measures it will. The caretakers do not have a stake the way elected officials do, and will work to satisfy the IMF, not the people of Pakistan.
