Fuel shortages
WE should have seen this coming. As has become the norm over the past 10 months or so, reports of a looming shortage of any essential good or commodity have only quickened its disappearance from the market. With the state helpless, unscrupulous elements have been given free rein to hoard various items and create artificial shortages, then charge a premium for the stocks they release. Automobile fuel has become the latest commodity to disappear from some markets, especially in Punjab, as traders speculate that the government may soon be forced to increase prices in order to tie up its long-delayed deal with the IMF as well as fears that fuel may soon run out in the country due to held-up imports. There was prior warning that there could be trouble when news reports at the end of January spoke of a looming fuel supply crunch due to banks’ refusal to finance and facilitate payments for imports. The country’s depleted foreign exchange reserves, currently below $3bn, had necessitated blocking foreign payments.
Within a week, both large and small cities in Punjab were reporting rationing of fuel at pumps, prompting the Minister of State for Petroleum, Dr Musadik Malik, to issue a stern — but largely unheeded — warning to hoarders. The Oil & Gas Regulatory Authority too shared with the Punjab chief secretary a list of locations where it believed fuel was being hoarded, for the necessary action to be taken. It remains to be seen how many will be brought to task over the matter and how many dealers’ licences will be cancelled, as warned by the minister. Meanwhile, the citizenry has little choice but to cope with the annoyance of long lines at fuelling stations and the uncertainty of not knowing when fuel supplies may run out completely. It is truly a sorry state of affairs, made worse by a government that appears clueless about how to responsibly manage an economy in crisis.
Published in Dawn, February 11th, 2023
Moscow boycott
NATURE abhors a vacuum, and if Pakistan does not attend key international meetings, it leaves the field open to hostile actors and forfeits this country’s right to contribute to the discussion at these events. In the case of a recently held multilateral event in Moscow, organised to discuss the situation in Afghanistan, Pakistan should not have boycotted the meeting to protest against India’s inclusion. Moreover, we should not have skipped this event when Russia had sent a key official to invite us. The event in question is the multilateral consultations of secretaries of (regional) security councils on Afghanistan, and along with hosts Russia, senior security officials from the Central Asian states, China, Iran and India were in attendance, while the moot was addressed by President Putin on Wednesday. Moscow’s point man on Afghanistan, Zamir Kabulov, had during his visit to Islamabad last month invited Pakistan to the event. However, there is some confusion about what followed, as the Foreign Office told the Russian emissary that this country supported regional solutions through the Moscow Format — another Russia-led initiative — though Mr Kabulov was reportedly under the impression that Pakistan would attend the security meeting that just concluded.
Firstly, it was undiplomatic of Pakistan to shun a direct invitation to the event. Secondly, while this country’s fears may well be true about India using Afghanistan as a launching pad for anti-Pakistan activity, as was apparently the case when the Western-backed dispensation ruled Kabul, boycotting meetings due to New Delhi’s presence will do little to address these concerns. If anything, such fora should be used by Pakistan to emphasise that Afghan soil should not be used to destabilise a regional state. As Afghanistan’s neighbour, Pakistan is amongst the states most affected by instability in that country. Therefore, its voice matters, but only if it raises its voice at all relevant regional and global platforms. At the recent Moscow moot, Mr Putin highlighted issues such as terrorism in Afghanistan, as well as humanitarian suffering in that country. These are all issues that directly affect Pakistan. In future, this country needs to participate vigorously in all such discussions that can help bring stability to Afghanistan, and ensure that Pakistan’s point of view is heard and its interests protected at all regional meetings, and that others do not take advantage of our absence to further isolate us.
Published in Dawn, February 11th, 2023
Final IMF deal?
THERE is still confusion over where matters stand between the government and the IMF. On Friday morning, Pakistan received the ‘Memorandum of Economic and Financial Policies’ draft, the key document stipulating the conditions, steps and policy actions that will form the basis of the staff-level agreement with the IMF.
The government is interpreting it as the ‘settlement’ of its differences with the Fund. Yet the IMF mission’s departure from the country without finalising the agreement indicates that large gaps still remain to be bridged.
The IMF’s carefully crafted, short concluding statement on the 10-day loan talks further underscores these gaps, despite the “considerable progress” on measures to remedy domestic and external imbalances.
That the IMF statement stresses the need for permanent revenue measures to strengthen Pakistan’s fiscal position implies that the lender isn’t satisfied with the government’s plan to boost revenues through temporary actions.
Similarly, Finance Minister Ishaq Dar’s early morning presser yesterday failed to give a clear picture of the position of the two sides on the issues under discussion.
What we know is that Islamabad has agreed to impose taxes of Rs170bn, reduce untargeted gas and energy subsidies, increase PDL on diesel by Rs10 to Rs50, raise allocations for BISP by Rs40bn and cap the gas sector’s circular debt at its current level.
With negotiations on the MEFP to continue virtually from Monday to discuss the measures needed before the final agreement is signed, it is hoped that the two sides will hammer out their differences in the next few days. The outcome of the virtual discussions will nevertheless depend on how wide apart the current positions are on the issues on the table.
The onus of convincing the Fund to soften some of its conditions and settle differences will obviously be on Islamabad. Pakistan has so far found it tough to deal with the Fund in recent months due to the former’s weakening credibility.
As a result, we have seen its reserves drop critically — to below $3bn because of dwindling official foreign inflows.
We don’t know exactly what the final agreement with the IMF would entail for the people. However, it is clear that the measures that are needed to put the economy back on track would bring significant hardship to the common Pakistani, a price that can no longer be avoided or minimised, unfortunately.
Conversely, the failure to close the deal quickly will have more serious consequences. There is a lesson to be learnt from Sri Lanka. Things can get a lot more difficult for Pakistan if the talks drag on unnecessarily.
Even a quicker agreement will not fetch us the IMF dollars before the middle of next month, but it will unlock inflows from friendly countries and multilaterals to help shore up the fragile external sector.
Published in Dawn, February 11th, 2023