Pakistan’s Inflation Crisis: A Battle for Economic Stability

To meet the terms and conditions set by the International Monetary Fund (IMF) and boost the country’s revenue, Pakistan’s current interim government took a gallant step by imposing super taxes on electricity and petroleum prices. However, this decision ignited nationwide protests, with lawyers, traders, and members of civil society taking to the streets in anti-inflation demonstrations. The situation became so dire that people resorted to burning their electricity bills, unable to bear the mounting costs.

Due to countrywide protests, Caretaker Prime Minister Anwar-ul-Haq Kakar talked to senior journalists and representatives of foreign media in Islamabad on electricity affairs. He said “The government is in negotiations with IPPs (Independent Power Producers) on this issue, and discussing the unfair electricity contracts. The government will implement the promises made to different financial institutions including the IMF on the issue of electricity bills. The government is trying to get some concessions, the details of which cannot be disclosed yet”.

The interim prime minister said that the government will find a short-term solution to the problem without hurting the sentiments of the protestors, and will take a fact-based decision to satisfy the people. He further said that it is the authority of the Parliament to allocate the budget for all sectors, the interim government is running economic and financial affairs within their scope, constitutionally they cannot make major changes in the government system, they can only make short-term reforms while the future decision will be taken by the next elected government.

Some sources claimed that the Ministry of Finance has submitted a new plan for relief in electricity bills to the International Monetary Fund (IMF). According to sources, the additional amount allocated to IPPs may be adjusted to provide relief in electricity bills. The officials of the Finance Ministry will take up the new plan with the IMF and a final decision will be made after the approval of the IMF.

EAT News interviewed Senator Siraj ul Haq, head of the right-wing religious-political party on the current inflation, power tariff, and petroleum taxation. He said, “The government has to take actions keeping in mind the people of Pakistan, PM Anwar ul Haq Kaker is representing the people of the country, not IMF, why do we take dictations on the instructions of an international financial institution? If all decisions were made by the IMF, there would be serious questions about the sovereignty and integrity of Pakistan. It seems the interim PM does not know the ground realities, people are committing suicides due to hunger and inflation. Shutdown strikes are being observed throughout the country, and it is difficult to understand why the interim government is not picking the pulse of the time. It is their responsibility to conduct fresh elections in the country on a priority basis”.

To know the public sentiments, EAT News conducted a small survey based on the opinion of the general public. EAT News talked to Ms. Wajeeha Imran, she is a housewife, and her husband is associated with a media organization as a cabal operator. She said, “I am unable to understand why the sitting government abruptly increased the electricity prices, we have limited income, we have three children, and they are studying in a government school. The only matter that we discuss in our home is inflation and electricity prices. We paid our last month’s electricity bill by borrowing money from our relatives, and now we are not in a position to return the borrowed amount. All the time, me and my husband think about how we and our children will survive in these conditions. I am tongue-tied, this month we received an electricity bill of PKR 40 thousand. I am asking the government to please revisit its policies otherwise the majority of the people will not be able to pay their utility bills”.

Mr. Javid Baloch is a tailor, who owns a small shop in the suburban area of Islamabad, EAT News talked to Mr. Javid about the inflation issue. He said, “It is almost impossible for people to feed their families, in this situation new garments and their stitching is a luxury, not a need. Sometimes it happens that I go home with empty hands in the evening. Since the last two years, inflation has been accelerating at rocket speed. However, the current increase in power tariff has broken the backbone of every Pakistani from the middle class. Stitching and sewing, all my work is linked with electricity supply, but current rates are unbearable, and income is decreasing while bills are increasing. I tell my customers that the tailoring of the suit has to be increased because I am forced to pay electricity bills, and they reply to me they are also facing the same situation”.

Mr. Adnan Khan, a 46-year-old plumber from a remote area of Pakistan, is currently living in the capital city. The same question was asked to Mr. Khan by EAT News, and he replied with huge disappointment. He said, “I am here at least 500 kilometers away from my hometown. I get up early in the morning, I work hard the whole day to earn a respectful life for my family members. Whatever I receive is usually a small amount. Islamabad is an expensive city so it is difficult for me to save something and send it back to my village where my family is living. Unfortunately, a huge portion of my savings is used to pay utility bills, more specifically electricity bills. I do not recognize why the current government is imposing super taxes on its citizens, although the government knows that the majority of people are living under the poverty line. People cannot pay the bills which creates more unrest in society”.

Surrounded by economic challenges, when Pakistan supported its crumbling economy by making a recent agreement with the IMF, the people had to pay a heavy price from their pockets in the form of an increase in the prices of petrol and electricity and various other taxes.

During the coalition government of PDM (Pakistan Democratic Movement), the price of electricity increased by an average of 100 times. Now the caretaker government has also further increased the per unit price, after which the electricity bills received in August have created confusion, uncertainty, and mess for the common masses.

With protests spreading across the country and reports of suicides due to high inflation, personal loans, and electricity bills, social scientists warn of the looming specter of civil disobedience. Urgent government action is essential to address these concerns and prevent a potential civil crisis in Pakistan.