LAHORE: Reacting to Prime Minister Imran Khan’s speech and his announcement of the surprise relief package, the economists fear for the International Monetary Fund programme, a fresh spree of borrowing to finance the package and a possibility of election; however, the jubilant general public welcomes the relief.

In his speech on Monday, the PM slashed diesel and petrol prices by Rs10 per litre and electricity rate by Rs5 per unit while promising to sustain the reduced rates till the next budget, which is at least four months away. The economists termed the move troubling for the economy unlike the people who welcomed it.

A well-known economist, who did not want to be named for his own reasons, says “if a government has to come up with packages every three months, it simply means it does not have a policy. If it has to depend on packages in the fourth year of its tenure, one can imagine what kind of policy chaos it as well as the nation had gone through”.

He says the confusion in the speech was also evident when PM Khan tried to prove that the current inflation rate was the same or close to what it was during the PML-N and PPP tenures. If that was the case, what was the urgency for such a relief package? Instead of this adhocism, the economy and businesses need a long term policy. Packages have not led Pakistan anywhere in the past, nor would it now, he argues.

“If such a relief package was necessary, where is costing? Where is the homework? What is going to be cost for the economy and how would it be met? Instead of clarifying the rules of the game in a long-term policy, the government rigs them regularly, costing the country very dearly,” he regretted.

Pervez Tahir, a known economist, thinks that one inevitable result (of the package) would be practically abandoning the IMF programme, which will have its own indirect economic cost– in addition to the direct cost the package would incur.

“Its cost will be met through further borrowing, creating additional pressure on the already beleaguered economy. These kinds of populist measures hardly make economic sense, especially during crunch time. For how long can this government finance petroleum products and avoid an increase in electricity price, it remains to be seen.” But it would certainly further upset the economy when it needs stability and certainty, he claims.

Dr Farrukh Saleem found himself totally confused in understanding the package and priorities of the government.

“The PTI government has done it twice: taking a tranche from the IMF and then violating its commitments. It did during the previous finance minister’s tenure, when it received a $500m tranche and stopped executing the programme. The current finance minister renegotiated it all over again, got the $1.2bn tranche, and now the government is violating it yet again. In the next four months, Pakistan has to pay around $8bn in loans. Without the IMF support and its all allied partners (the World Bank and ADB), how would it be doing all of it?”

Mr Saleem says that another dimension of the speech is electoral as the PM himself hinted when he asked the people to vote for the candidates who can ensure independent foreign policy.

“The PTI is now trapped between the promises made to international lenders and political compulsion — the PPP is already on the roads and the opposition threatening a no-confidence move. It has to provide some relief to the people to keep its electoral chances alive and does not have fiscal space. How it juggles now, we will see,” he says.

However, beyond the economists, who see no benefits of the package to the economy, the common man is happy.

“It is a long overdue relief, however small,” says Muhammad Ramzan, a resident of Gulberg who adds that any relief, coming at any cost, is welcome. We were bracing for further increase in petroleum products and for protest when the prime minister has cut the price. It can only be welcomed, he added.

Published in Dawn, March 1st, 2022