EDITORIAL:
The coalition government has recently implemented another mandated action from the IMF, jacking up gas prices by a staggering 113pc for six months. This move, though not particularly popular, was a necessary one as an increase in rates would have been inevitable anyway to save the two gas companies from utter bankruptcy.
Starting last month, this steep hike is expected to help the government recover a significant amount of Rs310bn from consumers during the second half of the current fiscal year, while simultaneously slowing down the buildup of debt in the gas sector. Brace yourself for another price increase from July.
If the gas sector is to survive in the long run, the authorities will have to go beyond these occasional increases and start linking gas rates to the global market. This, however, is easier said than done, as it would involve the elimination of massive, unsustainable subsidies. Such a measure would be tough for both the industry and residential users of piped fuel.
It is high time that a quarter of Pakistani households connected to piped gas stopped their wasteful and inefficient usage, while the rest of the population, mostly low-income people, are forced to use more expensive alternatives to cook and heat their homes. It’s not only a matter of economic responsibility but also of equitable access to resources.
Exporters, on the other hand, must move towards higher value-added exports, rather than continually putting pressure on the government to subsidize their inefficiencies. It’s time to step up and take some responsibility.
This step towards uniform gas pricing nationwide should be an important one, as it will help eliminate the cost advantage currently enjoyed by Karachi-based textile and other export industries over their counterparts in Punjab and upcountry. This move will not only ensure a more even playing field for all businesses but will also promote national unity and cohesion.
Pakistan has been grappling with economic issues for a long time, and solutions to these problems are well known to everyone. Unfortunately, no government has had the political will to implement them in full. The half-hearted reforms that they initiated were only done under pressure from international creditors. This has brought us to a point where the global rating agency Fitch has downgraded Pakistan’s long-term foreign currency issuer default rating to a mere ‘CCC-’ from its previous position of ‘CCC+’.
The downgrade comes just four months after Fitch revised down the ranking to CCC+. The agency cited further worsening of liquidity and policy risks, along with pressure on reserves. This shows how dire the situation is, with foreign exchange reserves at critical levels, and external liquidity and funding conditions deteriorating sharply.
Fitch’s opinion on the matter is that the IMF program will need to be revived, but it doesn’t rule out “large risks to continued program performance and funding, including in the run-up to this year’s elections.” In its view, there is an increasingly real possibility of default or debt restructuring as the country’s reserves drop to less than three weeks of imports.
It is foolish to expect the world to bail us out when Pakistan’s credibility is at an all-time low and the ruling elite shows no signs of wanting to change their lifestyles. Why should the world help us if we are not willing to take substantial measures ourselves?
Pakistan needs to take bold steps to address its economic problems. This includes taking measures to improve governance, increasing transparency, and taking a tough stance on corruption. The country needs to reduce its reliance on foreign loans and increase its revenue base. It is time to take control of our own economic destiny and not rely on external support.
The first step is to reduce government expenditure and create a more efficient public sector. This can be done by eliminating wasteful spending, reducing the size of the bureaucracy, and implementing merit-based hiring practices. The private sector needs to be encouraged to invest and grow, and the government needs to provide a stable and predictable regulatory environment.
Pakistan must also focus on its exports and take steps to promote exports of value-added goods. This can be achieved by investing in technology and infrastructure, creating special economic zones, and streamlining the export process. The government should provide incentives for businesses to export and reduce the cost of doing business.
In addition, Pakistan must address its energy crisis. The country has immense potential in renewable energy, and it must take advantage of it. Investment in renewable energy will not only help Pakistan reduce its dependence on fossil fuels but also provide jobs and boost the economy.
Finally, Pakistan must focus on education and human development. The country needs to invest in its people and provide quality education, healthcare, and other basic amenities. This will not only improve the standard of living for Pakistanis but also create a more skilled and productive workforce.
In conclusion, Pakistan needs to take ownership of its economic problems and implement tough but necessary reforms. The country needs to reduce its reliance on external support and focus on creating a sustainable and prosperous future. It is time for the ruling elite to take responsibility and work towards building a brighter future for all Pakistanis.
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