The PTI government took a number of tough decisions to get the IMF programme back on track. Among the more significant ones are the amendments in the Nepra Act and the full autonomy given to the State Bank of Pakistan. The reforms have encouraged the Fund to okay the four pending reviews of Pakistan’s economy and release the next loan tranche of around $500m. Revival of the programme would facilitate the government, that is heavily dependent on external borrowings, in accessing the international financial institutions.
The amendments in the Nepra Act would take key powers out of the hands of the government by introducing the element of automaticity in the rise of power charges. The aim is to get rid of the circular debt which has accumulated due to several factors, the cost of power being just one. The government has thus surrendered its power to the regulating authority. The amendments to the State Bank Act take the government out from the processes that decide the price of money, like interest rates and the exchange rate. What is more, the State Bank will be debarred from lending directly to government.
The burden of taxes has started to increase. Tax exemptions of Rs140 billion given to various sectors of the economy have already been withdrawn. The extraordinary increase in power tariff has led the opposition call it a Rs 884 billion electricity bomb dropped on the common man. Keeping in view the recent statements from the SNGPL and SSGPL, a big increase in gas rates is expected any time. There is much more in the pipeline. The IMF programme framework has now been extended closer to the completion of the PTI’s five-year term in August 2023 instead of the originally planned September 2022. Thus during its entire tenure the PTI administration would be facing the ire of various sections of population on account of its own multifarious shortcomings along with the stringent policies of the IMF. By the time a modicum of financial discipline starts producing dividends, the PTI will face elections.
It would be galling for the PTI leadership to relinquish power at that juncture. When elections are held in a situation of the type, moral considerations tend to take the back seat and ends start justifying means. In case this happens, this would cause a confrontation with the opposition never seen before.
