Petrol bomb

The impossible dream is over

The government had bravely announced after the first massive price rise it had to make that it would not raise prices any further. That was a promise that looked impossible to keep, and it has proved to be so. The present hike, which is more than the price used to be not so long ago was hasty, is shown by the fact that the government had to make it in the middle of the one-week review period it had itself set, after cutting it down from the fortnight of pre-war days. It was also noticeable that the duty of making the announcement was left to Petroleum Minister Ali Pervaziz Malik, though this time he made the announcement while accompanied by the Finance Minister. Some attempt at palliation was made, as the targeted subsidy was announced for motorcyclists and goods transporters, as all as intercity and intracity transport vehicles. A noticeable omission was fuel for tractors, which will become important in the days to come, first for the wheat harvest, and then for the Kharif sowing. However, it may simply be that the government cannot afford it, for it has refrained from subsidizing the transport use of tractors.

The government is trying its hardest to meet IMF conditionalities, which demand a certain primary surplus. That is the reason the taxation burden is being maintained, and the petroleum lvey was even enhanced on diesel. One of the first things that has been sacrificed is the development budget, off which Rs one trillion have been slashed. The National Accounts Committee, on the other hand, has reported 3.89 percent growth in the second quarter, with industrial and services growth leading the way. While growth may not hav dropped as much as feared, the forex situation is getting bad, which means the crisis out of which Pakistan barely emerged, may engulf it again, as servicing foreign debt once again becomes difficult.

The possibility of further hikes cannot be ruled out. The longer the Hormuz Strait remains closed, the higher the price of oil will climb. Already, there has been talk of the oil price reaching $200 per barrel. What to speak of the whole world it would mean astronomical prices in Pakistan, upwards of Rs 400 vper litre. Though Finance Minister Muhammad Aurangzeb is going to Washington for the annual World Bank-IMF meetings, it remains to be seen whether he can get any relief from them.