The Express Tribune Editorial 2 May 2020

Time for empathy

Like elsewhere in the world, clamour for relaxing the lockdown imposed to prevent the spread of the coronavirus is growing in Pakistan too. Especially the country’s working classes are getting restive because of the prolonged restrictions on physical movement, as every passing day they see their savings getting depleted or even entirely dried up. Even in the US and European countries, which have seen a high number of deaths and infections, businesses and workers have been demanding easing of the lockdown to enable people to keep their bodies and souls together. In developing countries like Pakistan, the case for a moderate lockdown is fairly strong. Infections and fatalities in the country are much lower than the projections.

Prime Minister Imran Khan is rightly in favour of a moderate lockdown in view of the fact that the country has a large population who earn their livelihood on a day-to-day basis. They have nothing to fall back upon except to sell their labour in the market. On the other hand, the Sindh government is enforcing a strict lockdown which is an effective way of ensuring social distancing necessary for preventing the deadly virus. They are also hinting at further tightening the lockdown during Ramazan as they fear that infections might increase in this month because people tend to converge on markets to buy food items and for Eid shopping. The provincial government’s fears are not entirely unfounded.

In a situation when the common people are facing the two equally dangerous prospects of either dying from the coronavirus or from hunger, governments need to take the middle way. If birds are left in closed cages without water and food, sooner or later they will die of thirst and hunger. Curbs are necessary to protect people from the deadly virus, but excessive controls are proving counter-productive.

May Day reminders

The coronavirus pandemic rampages on, having infected more than 3.3 million people across the globe and killing over two hundred and thirty thousand. The novel virus has also infected the world economy like never before: knocking down global financial markets, sending oil prices in the negative zone for the first time in history, and bringing nearly all big and small businesses to a grinding halt, etc. This decline in the global economy — described by the IMF as the worst since the Great Depression of the 1930s — has been felt by all and sundry, from the man in the mansion to the dweller in the hut; from a high-profile tech tycoon to a nickel-and-dime street vendor; from policymakers scrambling to prune annual budgets to housewives who are forced to cut down on home spendings; and from a somebody to a nobody.

Amid this unprecedented economic upheaval, labourers and daily wage earners are a segment that has been hit like nobody else. While the labourers have been the most vulnerable social class even in the normal times, they have been squeezed dry in these days of lockdowns resulting from the mushrooming coronavirus. So tough is the situation that a majority of these out-of-work labourers have been forced to beg on the streets so as to feed their families. And those who cannot stretch out their hands for alms have no other option but to remain empty stomach. The labour world has indeed experienced a great turbulence.

And what else than the 1st of May can be a more opportune time to remind our rulers of the unfulfilled promises that they make year after year on the occasion of the World Labour Day. Informal employment in various contractual forms is what defines our labour market. There is need to bring in genuine reforms in the labour market — something that acquires special significance in the present context.

Oil price relief

The government has approved massive cuts in fuel prices, with a litre of diesel going down by over Rs27 and petrol getting Rs15 cheaper. Diesel will now sell for Rs80.10, and petrol for Rs81.58. Amazingly, the cuts are still below what the Oil and Gas Regulatory Authority (Ogra) had recommended. The regulator had suggested dropping diesel prices by almost Rs34, and petrol by Rs21. These would have amounted to reductions of around 32% and 21% respectively, which are still below the amount by which the international oil prices have fallen.

Prices, of course, have crashed due to an unprecedented fall in global demand thanks to the global Covid-19 coronavirus pandemic and the lockdowns imposed to level its infection curve. Demand fell so much that at one point West Texas Intermediate, the oil standard in the US, fell over 300% in a single day and went into negative territory before rebounding slightly, with dealers literally paying around $37 a barrel to get the black gold off their hands. Pakistan, like much of the world, relies on Brent Crude, which also fell dramatically in the past few weeks, although not as much as WTI. Brent prices have dropped more than 50% over the last month.

Even ignoring such anomalies, the rate of decline has been such that even countries that allow more frequent price changes based on international oil price trends have struggled to keep pace. In Pakistan’s case, the problem is two-fold. The country remains dependent on indirect taxes such as those on fuel. Lowering fuel prices too much also means lowering government revenues, which are also in a precarious shape due to additional outlay on coronavirus stimulus and tumbling incomes due to reduced economic activity. Another problem is the rupee crash against the dollar. After stabilising somewhat over the winter, the rupee is down more than 3% against the greenback since March, and at one point had fallen almost 9%. That has caused the cost of imports to rise sharply and fueled further inflation.
Despite this, fuel prices in Pakistan are still among the lowest in the world for countries that are net importers of oil. Unfortunately, so are incomes.