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It has been a long time since Akram Khan, the father of seven children in his 40s, was able to feed his family meat. “A year ago, I would bring a basket full every morning,” said the fruit seller, pointing to his empty cart of guavas, bananas and a few apples at the busy market of Islamabad. “Rising prices have made it extremely difficult. . . Now, people cannot afford to buy as much as they used to.
More than 220m Pakistanis have survived a major coronavirus crisis, thanks in part to a brief, open government policy.
But now they are facing a new challenge: rising prices have become worse over the years, with daily demands such as oil, food and soap last week rising above 18 percent each year.
The rupee has also fallen sharply, losing 15 percent of its value against the dollar in six months. Officials fear that the high cost of foreign exchange will damage foreign exchange reserves and disrupt the economy.
This poses a serious challenge to the Prime Minister Imran Khan. His Pakistan Tehreek-e-Insaf party won a landslide victory in 2018 vowing to end the country’s economic instability, with more debt and less foreign investment forced to repay recurring loans from institutions such as the IMF.
But Khan was found to be in the same predicament, and rival factions struggled to take advantage of the recent rise in prices to weaken or get rid of him before holding the remaining two years of his term.
“The political meaning of [inflation] it’s great. For the PTI government from the beginning, the economy has been very weak, “said Bilal Gilani, Gallup Pakistan’s chief executive.”
Officials say they are working to resolve the issue. The IMF and Pakistan last week agreed to resume the next $ 1bn a suspended a $ 6bn financial package was signed in 2019, pending final approval from the central fund.
The State Bank of Pakistan last month also raised interest rates by 150 to 8.75 percent in an attempt to curb inflation. The central bank said it had also taken steps to release the exchange rate, which it believes will help over time.
Some analysts, such as Gilani, however, believe that the central bank has continued to interfere in the financial market.
Reza Baqir, governor of the central bank and IMF executive, adauza Financial Times that Pakistan is working to end the “mass of goods” that have disrupted its economy. “We will not allow our history to ruin our future,” he said in an interview last month. “What we’re trying to do here is reflect the old breath.”
Officials say rising prices are contributing to global inflation. But critics say Pakistan’s problem stemmed from a domestic crisis that forced Khan – who said he would rather die than take a “begging plate” from foreign countries – to comply with Pakistan’s 12th IMF mandate since the 1980s.
“Design issues have not been addressed,” said Asad Sayeed at the Collective for Social Science Research, a think tank based on Karachi.
The PTI was “behind the scourge of corruption”, Sayeed added, adding that the party protested: “As soon as we enter government and corruption will end, then the rivers of milk and honey will flow.” Nothing happened. ”
Pakistan expects a 4 percent growth rate this year, according to Fitch, the International Monetary Fund, but the hot economy is also boosting growth in commodities such as oil and new vehicles.
With Pakistan’s fragile sector unable to cope with the economic downturn, the account deficit that ended in September grew to $ 3.4bn, compared to $ 1.9bn in the previous fiscal year ending in July.
Rupee depreciated by a decrease of more than Rs170 per dollar when the IMF stand-up program disrupted investors. But for the fund to resume financial support, Khan had to do so admit the pain such as rising prices for petrol and electricity.
Researchers have warned that this unpopular stance could escalate into a full-blown political crisis by continuing to squeeze low-income Pakistanis and small businesses. “Even motorcyclists are complaining [about] oil prices, “said Ayaz Amir, a former member of parliament and the opposition PML-N.” The government appears insecure. “
To alleviate the shortfall, Khan launched a $ 700m plan last month to provide basic services such as flour and pulses to millions of eligible families. The minister praised the effort, which he said was the largest in the country and would provide much needed relief, in line with his government’s goal of establishing an Islamic state of humanitarian aid.
“All this is possible to make Pakistan a country that should be… A country that takes responsibility for the rest,” Khan said in a statement last month.
But critics wonder whether the government’s actions could be useful in solving short-term financial problems and tackling deep-seated problems.
Azeema Cheema, director at Verso Consulting in Islamabad, said the Khan government was doing a lot “to improve public opinion on the issue of rising prices, but not really. [to] coping with rising prices. This will be a very cold winter day. ”
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