A Populist Decision

The federal cabinet’s return from London has revealed some of the key decisions the new allied government will be making over the course of its tenure. The key question was whether the new administration would be continuing the misguided fuel subsidies left behind by the previous government, and it looks like the new Shehbaz Sharif cabinet will not be taking the political risk of increasing fuel prices in the coming days.

It is unclear why the government is choosing to take this path. Key members of the new administration—Finance Minister Miftah Ismail included—have pointed out the high cost being borne by the government as a result of this subsidy. Not just this, but any new agreements with the IMF or other lenders are contingent upon first rolling back the fuel subsidies.

At a time when the economy is on the verge of collapse, a government that came to fix the problems of the old administration should be brave enough to make the hard decisions. To not increase the prices implies that the government is not really trying to rectify the mistakes of the outgoing government. For the Finance Minister to say that these prices might be increased later also makes no sense. The high cost being borne per month entails that the subsidies should be rolled back sooner rather than later.

The allied government must remember why it chose to come into power. Economic readjustments, electoral reforms and changes to the accountability mechanism in a terribly short timeframe are the big asks for the government in the next year and half. If it fails to achieve any of its aims, the move to overthrow the Imran Khan government through the no-confidence motion will only have damaged its own credibility. When it cannot provide economic relief before the elections, voters are likely to blame the new set up rather than the outgoing PTI government.

The new government is undoubtedly caught between a rock and a hard place. But it knew that this term would never have been easy. If it can deliver within a year and half, it can cement its support in the next election—and also ensure that the field is level for all contestants without prejudice. The new government is risking causing itself more trouble than is worth; by not taking the hard decisions sooner rather than later, the new administration is not solving anything, and is only taking the blame for the rapidly worsening economic situation. Something will have to change in the days ahead.

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