Inflation wave: IMF conditions become challenge for Shehbaz Sharif govt

The price of the US dollar has reached Rs255 while there is another hike in electricity and gas rates from 16 to 30 per cent. The IMF conditions became a new challenge for PM Shehbaz Sharif-led government.

The Pakistan Muslim League Nawaz (PML-N) is now trying to get rid of the rulership after suffering major blows since getting into power, on the other hand, differences have been surfacing among the coalition partners.

The PML-N and its allies came to power with tall claims but now they are regretting to accept the rulership,

The ruling coalition parties have failed on all fronts and their formulas brought troubles. Prior to getting into power, PML-N central leaders, Miftah Ismail and Bilal Kayani, had made tall claims of reviving the economy and envisaging a complete framework for economic reforms.

However, things did not create favourable grounds for the PML-N and its allies due to horrible inflation and unemployment as people are not in the mood to trust the current rulers.

The remittances of overseas Pakistanis have been reduced in these eight months while foreign investors are not willing to go to Pakistan, on the other hand, the country’s own industry is shutting down.

All major industrial units including textiles and auto firms are on the brink of collapse and found no other option than shutting down the production plants.

The PML-N gave an impression of Ishaq Dar as a saviour of the economy but he failed to make a big chance.

When Ishaq Dar took charge as the finance minister on September 26, 2022, Pakistan has been under constant risk of default which is now increasing day by day, whereas, foreign exchange reserves have reached an eight-year low.

The situation is going to get more serious in January 2023 as Pakistan desperately needs to revive the International Monetary Fund (IMF) programme.

Dar is now becoming more focused on the restoration of the IMF programme. The total circular debt of the energy sector reached Rs4,100 billion and the IMF asked for a complete roadmap to reduce it. To implement this roadmap, both electricity and gas rates are expected to be hiked in January.

The coalition government collected Rs855 billion this financial year till June 2023 in the form of petroleum levy. According to the IMF, there may be a shortfall of Rs350 billion. The shortfall in tax collection increased the pressure on the Federal Board of Revenue (FBR) to achieve the target. If more taxes are imposed, the reign of inflation in the country will become more severe.

Another major failure of Finance Minister Ishaq Dar is tampering with the exchange rate of the dollar. According to the IMF, the traditional strategy of the finance minister has failed and reducing the rate of the dollar below Rs200 has proved to be just a dream. According to IMF estimates, the dollar exchange rate is up to Rs 255.

In such a situation, serious differences are emerging within the PML-N and Miftah Ismail is now pointing out defects of the economic policies adopted by Finance Minister Ishaq Dar.

The PML-N leaders who were constantly opposing the option to get into power and supporting the completion of the five-year tenure of Imran Khan’s government are now proud of their narrative.

On May 19, 2022, in a rally in Sargodha, Maryam Nawaz advised the people that the PML-N government should leave power.

Later, PM Shehbaz Sharif gave the narrative of saving the state instead of politics. However, his narrative  is now become a serious trouble for the political party.