With three positive economic indicators over a little more than a day, the government can breathe a sigh of relief; these are signs that we might slowly be heading towards recovery. The first of these is the government’s own doing—the deal it just struck with Independent Power Producers (IPPs) to reduce the cost of power generation and reduce circular debt.

Reports indicate that the new MoU, which will be formalised into an agreement in the next 30 days, features thirteen points, which, among other things, pertain to reducing the late payment surcharge and sharing any savings made from plant efficiency between the government and the IPPs. With the Prime Minister also detailing a policy on preventing line losses and power theft, he should be commended for these long-term steps being taken to stabilise the power sector.

Beyond this, the inflow of $290 million in the month of July also indicates that the rupee might stop consistently losing value, at least in the short run. Remittances have increased with the end of lockdowns across the world. There are still some fears regarding the potential withdrawal of Saudi funds, but things are looking a lot more positive on a monthly basis.

The government has also managed to increase its revenue stream by over 40 percent through oil levies, even though the amount of oil imported this year was 25 percent less compared to last year. This also indicates that the government has increased taxes for the final consumer on oil-based products. But this is a perfectly legitimate way to increase government revenue, but only if the government is consistent about it, unlike the last few months where some believe that the increase in prices of fuel was down to the pressure exerted on the government by OMCs.

Ultimately, there are steps being taken, especially in the power sector, that could lead to long term growth and stability in the energy sector; the only hope is that the final deal comes within the mandated 30-day timeframe.