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Gas price hikes and IMF

Adil Zia

Pakistan Tehreek-E-Insaf’s stance over price hike change with every passing moment, before coming into power, PTI vehemently opposed inflation. On 22 December, 2013, Imran Khan was leading a rally; one of the banners hung on Imran Khan’s container contained the words:

“Hakumrano! Gharebo ko jeenay ka haq do, Mehngai kay khilaf awam ka ihtijaj”. Furthermore, Asad Umer castigated the rise of petroleum and gas prices in National Assembly as well as in his political meetings. Beside this, Pakistan Tehreek Insaf’s official twitter account stated that PTI will not increase prices of gas and petroleum once it came into power. Then right after coming into power, PTI changed its stance with a sudden U-turn as far as rise in prices are concerned.

In the first week of September, the news in the national media circulated regarding the increase in prices of various fuel commodities i.e. oil and gas. Pakistan’s Finance Minister Asad Umer categorically denied such reports saying that the news has been misreported in the media as no such decision has been taken. Same statement came from Information Minister Fawad Chaudary that government would not increase prices of gas and petroleum.

After few days, PTI government changed their stance and announced the increase of gas price upto 143%. This hike will generate a myriad of problems for common man in Naya-Pakistan. It will seriously affect the price of Compressed Natural Gas (CNG) per kilogram. First time in the history of Pakistan, CNG prices will cross the century figure; the price of CNG to increase upto 22 PKR. CNG has been largely used in transport vehicles thus increasing burden on poor. PTI led government should take special care of poor class because it is already in their motto to give full relief to this class.

Adding to this, such a hike in gas prices will affect the prices of related commodities. Take for example electricity. Its price is reported to increase by almost12% after gas hike. This will further contribute to the cause of unemployment. The poor must make his mind for coming financial jolts. At least, someone did appreciate the developments of the PTI government and that is International Monitory Fund (IMF). The financial institution further noted that such measures are not enough. IMF stressed the need for a further increase in gas and power tariffs. As PTI led government is moving towards taking loans from IMF, they will readily accept institution’s suggestions.

The premises of the IMF is to eliminate world’s poverty. But after the introduction of Bretton Woods system, and especially right after the Cold War, there is no such record of any state taking loans from IMF and becoming self-sufficient in a matter of time thus eliminating poverty from its territory. Moreover, there is no example of any state whose economy started developing in an upward direction after taking loans. IMF and other creditors like World Bank and Asian Infrastructure Development bank forecast the economic growth which is primarily based on decisiveness. This statement has been supported by John Perkins, one of the leading 25 economists in the world in the 1980s. Another major point of IMF is that the governments should illustrate austerity, and that, at the expense of its citizens.

The Government of Pakistan must be cautioned while taking loans from IMF. By the way, in past, Imran Khan criticised previous governments for taking loans from IMF but this time PTI led government is looking forward to take loans from IMF. In order to save itself from taking loans from IMF, PTI led government must look at other policy options like the launch sovereign bonds and taking steps towards initiating investments schemes for overseas Pakistanis. Moreover, the government must strictly adhere to the path of austerity in the real sense. Such steps will definitely result in boosting Pakistan’s economy in an upward direction and accomplishing the goal of self-sufficiency in the realm of financial management.

 

 

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