Monday, March 20 2023

IMF bailout: a silver bullet?
The mid of February 2023 was upbeat for the government of Pakistan as they inched closer to the preconditions of the International Monetary Fund (IMF) for the revival of the Extended Fund Facility worth $7 billion. However, the resumption of the programme remains in limbo to date, with the IMF demanding the incumbents to “do more”. As usual, the general public is bearing the brunt of years of financial mismanagement on the part of the ruling elite, with inflation peaking at 31.5 per cent year-on-year in February. The unlocking of the $1.1bn tranche seems arduous for the incumbents. The policy level talks, which started in February, are yet to be concluded with the signing of a staff-level agreement (SLA). The government abided by the Fund’s conditions, imposing additional revenue measures worth Rs170bn, introducing a market-based exchange rate, and hiking sales tax and federal excise duty, but the Fund changed its goalpost.
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Is default an option for Pakistan?
Keeping the government’s well-worn assurances aside, the International Monetary Fund (IMF) has yet not released the $1.2 billion tranche direly needed by Pakistan. While the country’s nuclear arsenal is not under threat, it is a testament to the fear of default that such questions are being raised. However, what would happen if the promised funds do not materialise? “Is Sri Lanka better after default?” the taboo question was voiced aloud by former Federal Board of Revenue (FBR) chairman Shabbar Zaidi, who seemed to think so in an interview with Dawn, a thought recently echoed by former president Asif Ali Zardari. “Sri Lanka is better off on all economic indicators. Their production is improving, their consumption habits are better, their exchange rate has stabilised, and their politics are less in flux. The default made them realise the country’s problems and take the hard decisions,” Mr Zaidi says.
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After hiking petrol prices, govt announces relief package for low-income families
Prime Minister Shehbaz Sharif said on Sunday that low-income segments would be given a subsidy of Rs50 per litre under the petroleum relief package. The announcement comes days after the government increased the prices of all petroleum products, except the insignificant light diesel oil, by up to Rs13 per litre for the next fortnight. The finance ministry said the increase was caused by an increase in Platts Singapore prices and the rupee’s depreciation over the outgoing fortnight. With the latest review, the most inflationary high-speed diesel (HSD) prices made a new record, reaching Rs293 per litre. The HSD price adjustment directly impacts consumer prices because of an increase in transport costs. The per-litre price of petrol was increased by Rs5 and that of HSD by Rs13. Since Jan 15, the government has increased the prices of HSD and petrol by Rs65 and Rs62 per litre, respectively. PM Shehbaz, while chairing a meeting in Lahore on Sunday, said the petroleum relief would be given to low-income consumers who have motorcycles, rickshaws, 800cc cars and other small vehicles.
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An equaliser of societal progress
It is needless to say that public transport is fundamental to sustainable urban development and the prosperity of cities. However, Pakistani cities lack a decent and affordable public transport system. This is despite the fact that the country is rapidly urbanising with a growing demand for safe, efficient, affordable and accessible public transport systems. Public transport in urban areas is generally slow, unsafe, inaccessible, and inconvenient due to inappropriate modes of transport and inadequate and improper route planning. Commuters endure the discomfort and hassle of existing public transport. This not only puts commuters’ safety at risk but also causes discomfort and a waste of their precious time. Inefficient and disorganised public transport deters labour force participation and effectual use of time and human resources, which have serious implications for individual workers, businesses, and overall society. Furthermore, the existing public transport impedes citizens’ mobility, productivity, and social well-being.
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Pakistan Steel opposes gas utility’s bid to grab its land at ‘low rate’
The Pakis­tan Steel Mills (PSM) has opposed a bid by the Sui Southern Gas Company Ltd to take over its 1,400 acres for Rs43 billion, a valuation the mill’s management has described as “one-sided”. The takeover bid has been made against the mill’s outstanding liabilities that the gas company’s management has worked out at Rs48bn as of Dec 31, 2022. Informed sources told Dawn that the SSGCL had asked the management of the PSM — the country’s largest distressed and industrial enterprise that has remained closed for some eight years — for a final meeting to settle the matter. The PSM’s caretaker management, however, belie­ves that not only the land evaluation price offe­red by the gas company is one-sided and precariously low, but also the working for liabilities is unfair and strings attached to the offer are unacceptable.
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