As expected, the government’s negotiation team, led by Finance Minister Miftah Ismail has returned home empty handed from its talks with the International Monetary Fund (IMF). The talks ended with the government unable to secure a deal. The fuel subsidies, depleting government funds by Rs20 billion a week, and the energy subsidies will have to be rolled back if the government wants to re-enter the programme with the IMF.
The allied government has come on the back of a two-fold agenda. One part of it—the electoral reforms—has already been put into action. Given that economic stability was the second mandate of this one-and-half-year rule, it is unclear why the government is balking from taking the hard decision.
Fearing the political fallout for a decision it had come to reverse is strange. Especially since the sooner these changes are made, the quicker the government can go about putting stability mechanisms in place and get the economy going once more. There is a reward to be had here if the government takes the risk; taking the economy back towards growth in such a short spell will give the PML-N and its allies only more support in the next elections.
However, for this, tough decisions have to be made. The government has gotten its legislative agenda out of the way, more or less; the electoral reforms and amendments to the NAB Ordinance are well on their way. It is hoped that the allies are not considering packing up once both have been finalised.
It is important to leave some sort of stability in place for the next government, after the elections. A workable budget for the next year will be needed, alongside commitments from financial lenders such as the IMF to help Pakistan keep up its financial commitments. All of this currently hinges on the fuel subsidies and power tariffs. It is time for the government to bite the bullet and close the chapter on this ill-advised financial move.
The allied government has come on the back of a two-fold agenda. One part of it—the electoral reforms—has already been put into action. Given that economic stability was the second mandate of this one-and-half-year rule, it is unclear why the government is balking from taking the hard decision.
Fearing the political fallout for a decision it had come to reverse is strange. Especially since the sooner these changes are made, the quicker the government can go about putting stability mechanisms in place and get the economy going once more. There is a reward to be had here if the government takes the risk; taking the economy back towards growth in such a short spell will give the PML-N and its allies only more support in the next elections.
However, for this, tough decisions have to be made. The government has gotten its legislative agenda out of the way, more or less; the electoral reforms and amendments to the NAB Ordinance are well on their way. It is hoped that the allies are not considering packing up once both have been finalised.
It is important to leave some sort of stability in place for the next government, after the elections. A workable budget for the next year will be needed, alongside commitments from financial lenders such as the IMF to help Pakistan keep up its financial commitments. All of this currently hinges on the fuel subsidies and power tariffs. It is time for the government to bite the bullet and close the chapter on this ill-advised financial move.
