Argentina and Pakistan: Both inked deals with IMF but a difference can't go unnoticed
Business
People can't be squeezed more, requiring urgent government action
LAHORE (Web Desk) – As people in Pakistan are protesting over unprecedented hike in electricity tariff and demanding the government to provide immediate relief amid record-high inflation, Argentina on Sunday announced a series of benefits for workers and pensioners intended to soften the blow of a severe economic crisis.
Read more: Argentina offers financial aid to crisis-hit workers and pensioners
The latest move comes just days after Argentina's government announced a price agreement for supermarkets to limit monthly increases to a maximum of 5 per cent for 90 days and decided to freeze fuel prices until October 31.
Both nations – one in South Asia and the other in South America – have several similarities: record-breaking inflation, their currencies going south and the agreements signed with the International Monetary Fund (IMF).
While people in Pakistan are being repeatedly bombed with the increase in petrol and diesel prices along with power and gas tariffs hike, Argentina is able to lessen the burden to some extent.
Pakistan’s real GDP (Purchasing Power Parity) in 2021 stood at $1.211 trillion while that of Argentina was recorded at $986.134 billion.
It is said that the government in Pakistan can’t extend any assistance to the masses and would have to hike the prices thanks to the IMF agreement.
However, it raises some serious questions: How can the Argentinian government afford to do so despite signing an agreement with the world’s top lender – IMF? Is it because of the nature of the deal and the conditions associated with it in our case? Why did Pakistan accept these conditions?
Or is it something else? Is it because of lack of political will or desire? Does it reflect the inability to allocate the resources for people and reduce the government expenditure to tackle the fiscal deficit?
POOR DON’T DESERVE FREE ELECTRICITY, CHEAP FLOUR
Providing any assistance to the masses has always been something controversial in Pakistan while being described as “wastage of resources" as the same circles heap praise when tax amnesty schemes are introduced for the elite who already enjoy a variety of tax exemptions and special subsidies.
The noise made over projects like Metro and Orange Line, which benefits the public directly is an example.
But there has been attempts to create some breathing space for the low-income groups but were rolled amid political opposition and selected judicial activism.
The short-lived Hamza Shehbaz-led government in Punjab had announced provision of free electricity for the households consuming up to 100 units with an initial allocation of Rs100 billion. And this scheme was later supposed to be expanded to 200 units or even 300.
However, the political opponents – PTI – moved the court which ordered its reversal. Only God knows how and where the allocated amount was used.
At the same time, Hamza had started provision of wheat flour at subsidised rates across the province – 10-kg bag for Rs420 and 20-kg for Rs840. Again the poor-friendly policy was withdrawn by Parvez Elahi who had replaced Hamza as Punjab chief minister with no clue of the money reserved for the purpose.
On the other hand, the federal government had to scarp the plan to supply cheaper petrol to the bike and other vehicles with less than 800CC capacity amid resistance both within and outside the country.
THINGS REMAINED THE SAME
The fact remains, whatever the case maybe, the government has been shifting all the burden to the masses and avoiding expansion of tax base to boost revenue collection. It relies upon adhocism – impose indirect taxes and hike tariffs to collect more.
Also, the reduced demand for electricity just like fuel also shows how the policies recommended by the IMF and the so-called foreign educated experts – hailing the Washington-based lender – have failed miserably. In fact, they paralysed the economy amid the revenue collection rush without taking the ground realities and long-term effects into account.
But the public reaction after receiving the inflated electricity bills this month has proved that we have reached the limit and the people can’t be squeezed more. They didn’t negotiate the deal with or accepted the conditions of IMF.
Moreover, they also don’t have any role in budget allocations and government expenditure [non-development].
As Prime Minister Anwaarul Haq is set to chair another round of meeting to discuss the power tariff crisis today (Monday), the government would have to provide relief as it is not just electricity tariff with the food inflation and the prices of all commodities/ utilities are skyrocketing to unbearable levels.
