While Prime Minister Imran Khan has yet to fulfil many of the major promises made before the 2018 elections, he has now come up with a set of vote catching relief measures that may seem premature as elections are more than a year away. The hefty relief package announced by the PM will cost Rs 237 billion in four months. Pakistan is already facing a liquidity crunch and is pulling on with the help of foreign loans, which make endorsement by the IMF a compulsion. While the IMF’s programme requires strict adherence to an austerity-based policy, Mr Khan has ordered the slashing of petrol prices by Rs 10 per litre and of the power tariff by Rs 5 per unit. Other relief measures announced require procurement of extra funds. College graduates have been promised skills-based internships and a monthly allowance of Rs 30,000. The Ehsaas stipend has been increased to Rs 14,000. There would be tax exemption for companies and freelancers in the IT sector, and overseas Pakistanis investing in Pakistan’s industries or carrying out joint ventures will get a five-year tax holiday. Under the Kamyab Jawan programme, the country’s youth and farmers would be given interest-free loans. Low-income citizens have been promised subsidized loans to build homes. According to the government’s programme, loans worth Rs 407 billion will be disbursed during the next two years.
While few would have a beef with the relief package, the question is how it is going to be financed as long as the government remains committed to the IMF’s austerity programme. It remains to be seen if the IMF is satisfied with the government’s promise not to increase fiscal deficit and make adjustments in expenditure while staying within the limits. Will the higher taxes needed to meet this pledge erode the relief granted?
The relief package comes at a time when the govt is under pressure on account of the opposition’s no-confidence move and the long marches. PTI dissidents as well coalition partners fear public black lash on account of the government’s failure to address sensitive issues like rising prices and unemployment. The announcement of populist measures has led some opposition leaders to conclude that the government wants to hold early elections and it might even dissolve the assemblies before the positive but temporary impact of the relief starts wearing off.
