IMF bailout – a tsunami for Pak Rupee

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By Senator Rehman Malik

I had predicted three months back that Rupee will hit to 150 to a dollar before the budget and now according to the Economic indicators I can say that it is going to hit further increase up to 160 to 165 post budget. It is yet to see whether the government would try to hold Rupee to at least to the present value to avoid further fall by using its abilities.

It looks as if the government has decided to allow the fall to fulfil its commitments to IMF for devaluation of rupees. The economic team must know that IMF had its own hidden agenda as this devaluation along with the other strict conditions are going to further black mail our country. This devaluation will create serious impacts over Pak economy. The price hike graphs will jump upward unhindered and inflation will increase further, also the essential imported items will become even more expensive. These pre-conditions of IMF have started giving jolts to our economy and sleepless nights to a common man as more growing price hike will now become a nightmare for the poor masses.

In fact the IMF deal was already done as the indicators of depleting rupee and new taxes were the part of the conditions but the economic teams preferred to keep it hidden from the nation due to their ulterior motives. The new economic team was “brought-in to materialize the IMF demands and convert it into the form of an agreement for further mortgaging the nation. The deal of further mortgaging of national assets is done and so we must be ready for additional burden.

This deal coupled with other economic parameters suggests that the price hike will be like a bigger tsunami which will bring bigger monster of price hike and thanks to IMF lovers in Pakistan.

The public was expecting that the government would not increase the price of petrol as almost every cabinet member had denied any further increase in petroleum prices. It is fortunate to note that despite constant denials at all levels the price was increased at the cost of the peace of mind and happiness of a common man.

The price of petrol was increased by Rs. 9/- before the open IMF deal but it is said that it was also part of the covert deal with IMF. This increase will leave accumulative effects to escalate more price hike and people will come under more economic pressure.

The condition of the IMF to increase the oil prices was met and is further dreadful to note that the Inflation in Pakistan has now reached to 9.41% from 8.82% in March only; the highest in last 5 years. It happened obviously because the government allowed it go higher as the controlling parameters were allowed to behave freely and additional printing of currency notes and more internal and external loans attributed in the increase inflation. The common man has been further burned with massive price hikes in all commonly used items across the country during Ramadan A view on the common italics are that Meat sellers increased prices by Rs. 20 -50 per kg, mutton dealers have increased prices to Rs. 1050 /- from Rs. 950 /-, boneless meat is now being sold at Rs 620 – 640 from Rs 600/- per kg, chicken dealers are charging as high as Rs 380 – 390 per kg, whereas in the last week of March, the chicken meat was being sold between Rs. 310 – 320 per kg.It is a picture of one item being consumed by the public

Among non-perishable items, flour prices have been raised twice. Sugar prices have also risen to Rs 70 /- per kg from Rs65 /- per kg. On the other hand, among vegetables, prices of onion have been increased.

Oil and Ghee Manufacturers also did not hesitate to do theirs by increasing the price of good quality cooking oil and ghee to Rs200/- per liter, after a jump of Rs20, as two months back it was being sold at Rs180 per liter.

Recently the government threw another inflation bomb on people by increasing the price of petroleum once again as a 12% increase in the price of petrol and 17% increase in diesel, light diesel and furnace oil has been announced. It seems as if the government is playing with the sentiments of people by first relaxing them with false hopes of no petroleum price hike and then actually making an increase over night. Petrol now costs Rs108 per liter and diesel costs Rs122.32 per liter.

It is unfortunate to note that this is still not the end of story as Pakistan is yet to deal with a fiscal budget 2019 ahead in few days and further taxes and price hikes will bring more burdens on the economy as indirect and direct taxes are expected to be imposed. The post budget situation is going to be dreadful for a common man.

The budget deficit is another dangerous factor and how will the government will be able to narrow down the deficit of 38 Kharab (i.e. 3.8 Trillion) and at the same time how the government will be able to do debt servicing.

The present increase in oil prices, decline in exports, rise in imports, increased price of utilities, debt servicing in the form of interest and repayments, increased taxes and duties etc. are the biggest challenges for the Government. Apparently the government has neither shared such a plan before the parliament nor before the public.

Moreover, the most alarming thing to note is that this new budget of 2019-20 will be made in the light of the IMF program rather duly dictated by the IMF. I pray to Almighty Allah to guide our economy handlers to follow the correct path to pull the country out of the present economic crises. The dependence on IMF is driving us gradually towards bankruptcy unless we act wise to avert it. I demand, on behalf of the public, to place the IMF agreement in the Parliament and no further such agreement should be done without taking the Parliament into confidence.

(The author is central leader of Pakistan Peoples’ Party, Chairman, Senate Committee on Interior Affairs and former Interior Minister.)