Caretaker Finance Minister Dr Shamshad Akhtar has said there are some signs of economic recovery, while addressing a press conference in Islamabad on Friday. Perhaps her Pollyanna-ish optimism is justified, but the improvement she saw could equally well be seen as
Things not getting worse. He mentioned the decrease in the CPI from 38 percent in May to 27 percent. She is economist enough to know that even 27 percent is a punitively high rate, and all it means is that hyperinflation has been avoided for now. As it is, nine percentage points is not a very dramatic fall, and means that the danger of a hyperinflation remains. Similarly, the State Bank’s Monetary Policy Committee’s keeping the interest rate unchanged my be one of the upturns she noticed, but that may owe more to policy not working, and the pleadings of the business community, which is represented by Federal, commerce, Textiles and Production Minister Gohar Ejaz. The dollar has also gone down, but that has been due to administrative measures rather than because of any improvement in the economy.
It is not that inflationary pressures have died down. True, the increase in the price of petrol, which is not just at a record high, but has gone past Rs 300 per litre for petrol, is not really the government’s fault, because international prices have gone up. However, it could be argued that the government should play a more proactive role in protecting the consumer than the one envisaged (and enforced) by the IMF, of merely passing on increases. However, so long as it merely passes on increases, even the current hike is enough to raise the Fuel Adjustment Surcharge in power bills, apart from increasing transport costs. No price decreases are seen in the international market in the near future
The real problems of the Pakistani economy are structural, and thus beyond the mandate of the caretakers. Only an elected government can manage those changes, so if the caretakers were to fulfil their mandate, which is holding elections on time, they will be doing what they are supposed to, and also doing what is required of them if they are to perform their national duty. Such things as extending the tax net and ending all types of evasion requires political will, and that requires the backing of the people, expressed in an election. No nominee, however educated or competent, can be a substitute.
