Inflation-hit Pakistanis
defeating Imran Khan

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By Samuel Baid

Pakistan Prime Minister Imran Khan faced the worst humiliation defeat last month (December) in his own stronghold, Khyber Pakhtun Khawa (KPK) at the hands of opposition conglomerate, Pakistan Democratic Movement (PDM), led by his arch-rival Maulana Fazlur Rahman. The PDM decisively ousted Imran’s Tehreek-i-Insaf Pakistan (PTI) in the provincial local body elections. Explaining the defeats, Imran’s supporters blamed it on the selection of candidates on dynastic considerations.

It is considered as a lame excuse. The truth is Imran’s failure on economic front which has made up a nightmare for poor and middle-income groups across Pakistan. People openly regret for having voted for Imran in July 2018. Imran’s voter of 2018 finds it difficult to run his kitchen or send his children to school. Dal, atta, ghee, oil, meat and vegetable, gas and electricity, clothes and footwear are all going out of his reach; whom should they blame if not the government. Recent survey says that more than 90 percent of the people dislike Imran’s government because of his economic failure.

Prime Minister Imran Khan facing biggest challenge inflation in country’s economy.

Surely, Imran must be aware of the common man’s plight. But all through three-and-a half years of his rule, he naively believed that by blaming previous governments of Nawaz Sharif’s Muslim League and Benazir Bhutto’s Pakistan People’s Party (PPP) for failed economy, things would be all right for his government. He betrayed his immaturity when he promised that he would apply the Chinese model of agriculture in Pakistan forgetting that his was not a communist country. In another naïve promise he said he would turn Gilgit-Baltistan into the world’s tourist spot like Switzerland which would earn all its money from tourism. Here he was forgetting that Gilgit-Baltistan is Indian territory occupied by Pakistan illegally. Moreover, will the Chinese, who are building China-Pakistan Economic Corridor (CPEC) here, allow western tourists. The secrecies of the plan have been kept even from Pakistani top officials. No Pakistani high-up can claim to know everything about it.

Another promise may sound ridiculous to many people. He intends to solve Pakistan’s economic problems by turning Pakistan into Madina which the Prophet ruled about 1,500 years ago. In the past three-and half years, there have been no signs of Imran taking the first step towards that goal.

There was a time when Pakistanis used to take pride in their home-made garments. They were the major exporters of garments. But today this place of pride has been snatched by Bangladesh while Pakistanis wait for consignments of used clothes and shoes from America and Western countries. Pakistani Urdu paper “Aeen” has written that Pakistanis are forced to buy used items to manage their homes. It writes that import of used clothes has increased by 90 percent. Old clothes markets, are spreading throughout Pakistan.

A man casts his vote at a polling station in Khyber Pakhtunkhwa. 

Another Urdu paper “Ummat” writes that due to inflation and unemployment, people are forced to buy used clothes. Even well-to-do families buy used school uniforms for their children. Stalls selling such items are spreading in Karachi.

Pakistani economists don’t see an end to the country’s economic woes despite all the bail-outs by the International Monetary Fund (IMF), the World Bank, and friends like Saudi Arabia, United Arab Emirates and China. Pakistan has been in and out of their debt net since 1958 when it approached the IMF. Since then, the common man has always blamed IMF for his economic problems.

Before becoming Prime Minister, Imran Khan was furiously opposed to IMF loans. But once in power, one of his first actions to escape bankruptcy was to send an SOS to the IMF to bail it out. In May 2019, Pakistan reached an agreement for a bailout package of 5.6 billion for 39 months when the IMF agreed to give Pakistan Extended Fund Facility (EFF). The agreement was subject to the IMF’s regular reviews of its economic policy and growth. The IMF demanded that Pakistan increase electricity charges and impose additional taxes to make up for the decrease in taxes when Imran took over power in 2018. Imran Khan hesitated. As a result the IMF put the programme on hold in January 2020.

A polling officer opens ballot box to count the votes in KPK

The government was caught in a cleft stick; it could not do without the IMF bail-out and, on the other hand, it was politically not strong enough to face the domestic consequences like the PTI’s defeat in local body polls in KPK and fall in its popularity across Pakistan. In March 2021, the IMF released $500 million tranche. The talks in June for another tranche remained inconclusive. According to PM’s top Finance Adviser Shaukat Tarin, Pakistan was expecting a tranche of $ 1 billion.

Constant fall in the value of the rupee is badly affecting the business and the people are bearing the brunt of increased power and gas tariffs and taxes recommended by the IMF. People curse the IMF. But other lenders like Saudi Arabia, UAE and China are also not so friendly as the Imran government tries to project them. Saudi Arabia agreed to loan out $4.2 billion to Pakistan on condition that if Pakistan defaults on any loan including loans of the IMF and the World Bank, the agreement would be cancelled. And in that case, Pakistan will have to pay $3 billion within three days failing which Saudi will have the right to confiscate Pakistan’s property worth $3 billion anywhere in the world.

That is frightening Pakistan’s former Chief of Tax Agency Shabbar Zaidi who says: “We keep on saying that everything is good; the country is running well, we have achieved great success and we brought tabdeeli (change) but this is utterly wrong. In my view, the country is, at the moment, bankrupt and not a going concern”. Can such a country manage paying back $ 3 billion within three days to Saudi Arabia?