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Sunday, July 3, 2022

Pakistan's May inflation is highest since 2020 but the worst is yet to come

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Pakistan Finance Minister Miftah Ismail came out with a series of tweets blaming the former Imran Khan-led Pakistan Tehreek-e-Insaaf (PTI) government for the current economic mess. He noted that Pakistan has the third highest inflation in the world due to the "incompetence" and "corruption" of the PTI government.

Amid dwindling foreign exchange reserves, Islamabad, which is negotiating a bailout package with the International Monetary Fund, finally decided to increase domestic fuel prices only last week. Needless to say that the impact of the fuel hike is yet to be absorbed and the increase will further push inflationary trends in the country.

For the last seven months, Pakistan’s inflation rate has remained in double digits.

In April, the inflation rate was 13.4 per cent. Though Pakistan’s finance minister, Ismail has indicated that the forthcoming Union Budget to be presented this month will be pro-people with measures to control inflation, analysts told India Narrative that "it is easier said than done" at this juncture. The impact of the Russia-Ukraine war has dealt a blow to Pakistan that is more severe than what was felt during the Covid 19 pandemic, Ismail had earlier said.

Analysts added that even after Pakistan gets the IMF bailout package, its miseries may not end.

"The bailout package will just provide a breather to the country but until structural reforms are undertaken, the story will remain the same," a senior analyst with a ratings agency said on condition of anonymity. Karachi based newspaper Dawn said that "in the longer run, Pakistan’s main problems can be solved by designing a credible sustainable future economic trajectory that inspires consumer and investor confidence."

Khan, despite losing power, has launched a scathing attack on the government. This has led to further political uncertainty and instability.

"Now our nation will suffer another massive dose of inflation at the hands of this cabal of crooks," Khan tweeted after the government announced the fuel price hike.

The analyst quoted above said that it is time Islamabad focused on the core issues that impact the overall health of the country.

"Each political party knows what is to be done and what is the best for the country but whether it does or not is another topic altogether," he added.

<br>(The content is being carried under an arrangement with indianarrative.com)

–indianarrative

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