Austerity time

It is no secret that Pakistan had no choice but to go to the IMF, given the economic emergency and threat of default the country was facing. The economic landmines left by the PTI government have no doubt made the office of the PM a most poisoned chalice but Prime Minister Shehbaz Sharif’s government's delayed decisions in increasing fuel prices did cost Pakistan in billions in six weeks. So how does Pakistan recover from the deep financial abyss into which it has fallen? For now, Prime Minister Shehbaz Sharif has ordered strict austerity measures such as not purchasing new vehicles, reducing petrol quota for bureaucrats and ministers, and cuts in electricity, gas and telephone bills of cabinet members and government officials. Sindh, Punjab and Khyber Pakhtunkhwa have also imposed a cut on petrol consumption for their ministers. But the question is if this austerity drive will lead to any relief. For the most part, without efforts at reducing subsidies for the elite, these measures may look good as headlines but will remain feel-good optics – while the people of the country contend with the worst financial crisis to hit the country.

There is also little doubt that the issue of inflation will play a large part in the next elections – the government having essentially handed over a potent slogan to the PTI. Most people will not be concerned about what led to these dire decisions nor will they care much for the PTI's role in getting us to where we stand today. For people, the current government is the one that has introduced these price hikes, and it is now up to the current government – which seems to have decided it is now definitely in this for the long haul – to provide some relief. Instead of dumping all of the burden of the economy on to the poor and the salaried classes, the government needs to look at the country's one per cent – take back special subsidies and tax exemptions; introduce taxes on large landholdings; and take back real-estate incentives. Essentially, the government needs to target the elite capture that has had the country in a choke-hold for decades.

The predictions by economic experts are enough to give sleepless nights to anyone that doesn't belong to the small elite whose perks never seem to get hit, no matter the crisis. The recent fuel hike, increase in gas prices by 45 per cent next month and Moody’s downgrading will likely lead to a slowing down of the economy, massive layoffs across the board, especially the private sector, and more price hikes following the budget – not to mention that inflation could rise up to 23 per cent by next year. If the government realizes how bad things will be – and there is little evidence to suggest it does not – surely it has a plan to at least somewhat mitigate the effects of this massive inflation? From a rollback of special privileges to certain industries and sectors to persuading the private sector to rethink employee salaries and work hours and days, the government needs to show its austerity drive doesn't stop at limiting fuel expenses of ministers and bureaucrats. There is no option for things to work on a business-as-usual level.