Federal Planning Minister Asad Umar has conceded that here is unusual inflation, but has held out two assurances that leave no one satisfied. The concession that prices are going up is actually not much of a concession, for it is obvious to all. However, to accept that, while not propounding a solution, is a not-so-hidden indicator to the consumer that the government is as much at sea as anyone. The claim that things will mend is March, without any indication of how that will transpire, is to ask the consumer to take the assurance on trust, and not to ask any questions until March. By then, presumably, something would turn up. Not necessarily an improvement in the economy, but a new excuse, a new deadline.
The explanation by Mr Umar, that inflation in Pakistan, in particular the petrol price hike, is caused by rising international commodity prices, does not wash, for while Mr Umar eagerly showed the inflation was worse in other countries, he did not mention higher purchasing power parities, which better enabled consumers abroad to bear the shock. This also does not explain how a tonga driver in Vehari is supposed to feel better about his situation knowing that a taxi driver in Vienna suffers higher inflation. All he knows is that he has to pay higher power bills, and it is doubtful if he will have forgotten that by March.
It is still not known what will happen then. What is known is that the Finance Minister’s delegation’s talks with the IMF, for resumption of its EFF, have not gone as well as the government had hoped. This lack of good news helped the rupee close at a new low on Tuesday. That also is the harbinger of a new round of inflation. There are now too many indicators of the economy going out of control, to be ignored. The PTI government must stop holding out hopes, as Mr Umar was doing with his talk of reductions in the prices of ghee and sugar, if it cannot fulfill them. He should know that the IMF does not approve of existing subsidies, and will not stand for introducing new ones, as he suggested.
