The government of Pakistan announced today that it was increasing the price of fuel by 9.9 per cent. The last time they tried this was two months ago.
Why the price increase? Two reasons: (1) the price of oil and diesel is indeed going up, and (2) the IMF is in Islamabad today to “review Pakistan’s economic performance.”
That performance has been dismal. Inflation is running at about 15 per cent. Output is flat. Budget deficits are still way too high. The government is only able to pay its bills because of an $11 billion emergency loan from the IMF. Corruption is rampant. And tens of millions of Pakistanis continue to live in abject poverty.
The IMF is insisting that Pakistan get its act together, but that seems unlikely. The more likely outcome is that the coalition government collapses.
A previous price rise, in January, was reversed days after its implementation when an important coalition party left the ruling alliance to protest against the increase, destabilizing the government of Prime Minister Yusuf Raza Gilani.
That party, the southern-based Muttahida Quami Movement, also condemned the Tuesday price rise and has said it would announce a response if the government did not reverse the raise within three days.
“The decision to increase the prices … is completely anti-people, as it will result in price hike in other daily usage items which will affect the poor people,” the party said in a statement.
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