Price Huddle -The Nation

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Speculation was rife on which direction the government’s discussions with the IMF will go, but the finance heads in the administration clarified that there was no stalemate, contrary to what was being reported by many media outlets on Sunday. The government did recognise however, that the recent spike in inflation led to public disgruntlement, evidenced by the Prime Minister’s decision to get the cabinet together on Monday to find some resolution and provide the much-needed relief to the people. But sadly, the result of this meeting will not have given much hope to the people.

As on previous occasions, targeted subsidies will follow on more products. There is also speculation that the government might look to expand the umbrella of welfare efforts for those in the lowest income groups. This would mean more cash assistance, and broadening the ambit for Ehsaas alongside other initiatives.

The problem however, is that it is not only the poorest that are affected by the consistent increase in the prices of commodities. Middle-income groups, those that use private transport for instance, will stand to suffer substantially as well. Inflation by its very nature is regressive, and shrinking pockets for all but the wealthiest means that collective purchasing power will decrease, leading to restricted growth for the country at large.

There is an expectation that the government must deliver some immediate resolution, especially with public discontent being vocalised across certain sections. The PDM has announced a round of protests, and the PPP already began its demonstration drive with Faisalabad on Monday. The Pakistan Bar Council has also threatened the same if there is no relief.

We are currently caught between a rock and a hard place. Global inflation is at its peak, and the IMF’s six and seventh reviews require some belt-tightening decisions and the purchasing power of the average person has not increased, even if growth is on the cards. Mr Asad Umer has indicated that the next five months will not be easy. But judging by the trendline of prices in Pakistan, it is unlikely that we are to see any silver lining even after this period unless the government makes some serious changes. What these adjustments will be and how much flexibility we have with the IMF programme, remains to be seen.