Imran Khan’s future falters as Pakistan grapples with high inflation
Housewife Maira Tayyab has considered begging for money to feed her family in inflation-ridden Pakistan, while shop owner Mohammad Hanif sees his thoughts turn to crime.
They are too proud and honest to act on impulse, but their woes are shared by millions of Pakistanis whose discontent threatens Prime Minister Imran Khan’s re-election chances next year.
For all the latest news, follow the Daily Star’s Google News channel.
“We cannot beg because we are white-collar workers,” Tayyab, 40, told AFP in Karachi, a bustling port city that is Pakistan’s financial capital.
But, she says, “We don’t know how we make ends meet.”
Inflation reached around 10% last year, according to the World Bank. The price of cooking oil has risen 130% since Khan took power and the cost of fuel has risen 45% to 145 rupees ($0.82) a liter in one year.
Tayyab’s sentiments are echoed by Kursheed Sharif, a 50-year-old mother of five, who unleashes a multitude of curses as she describes her family’s misfortunes.
“Only death seems an alternative to survival under this government,” she told AFP, on the verge of tears, in front of her unplastered rental shack.
Khan promised to sweep away decades of entrenched corruption and cronyism when his Pakistani Tehreek-e-Insaf (PTI) party came to power in 2018.
But its failure is already being felt at the polls, and last month the PTI was badly beaten in provincial elections in its Khyber Pakhtunkhwa stronghold.
“The government brags about its economic achievements, but in reality it has lost ground and credibility,” said Tauseef Ahmed Khan, a human rights activist and political commentator.
Inherited from a mess
Khan had campaigned on a platform of creating an Islamic welfare state, with effective taxation on businesses and individuals funding social projects to benefit the poor.
Analysts admit he inherited a mess – and the Covid-19 pandemic hasn’t helped – but his policies have done little to change the situation.
“Nothing is stable,” said Rashid Alam, who works for an international bank in Karachi.
“Rising unemployment, rising inflation…that’s the political and economic reality in Pakistan.”
The numbers confirm it.
Although the economy is expected to grow by 4% in 2022, it has remained largely stagnant for the past three years.
The rupiah has also taken a hit, losing 12% against the dollar since July – not helped by a $5tn trade deficit, and despite foreign currency remittances from a vast diaspora growing almost 10% to $12.9 billion.
Khan argued this week that Pakistan’s problems – particularly inflation – were not unique, saying it remained “one of the cheapest countries” in the world.
There are a few advantages.
Manufacturing and services are rebounding as lockdowns ease, the World Bank said, and better rains this year will boost agriculture.
But the biggest problem facing the economy is servicing nearly $127 billion in debt.
Khan successfully negotiated a $6 billion loan package from the International Monetary Fund (IMF) in 2019, but only a third was paid before the tap was turned off after the government failed to implement the promised reforms, including the reduction of subsidies on a range of essential products.
Pakistan had to agree to painful terms, such as higher gasoline and electricity prices.
Ahead of an IMF meeting later this month to decide whether to release another tranche, the government pushed through a mini-budget – with new or increased taxes on a range of imports, exports and services – which angered millions. .
“Can you imagine oil and sugar prices reaching this level? housewife Sharif lamented.
On the brink of bankruptcy, Islamabad recently took $3 billion each from China and Saudi Arabia, and $2 billion from the United Arab Emirates.
“All the borrowings he has taken now, from whatever sources, are to repay past borrowings,” said Qaiser Bengali, an independent economist.
“Essentially, the economy is bankrupt. Pakistan cannot repay its loans.”
Yet no one seems willing to pay for the services they want.
Tax evasion is almost a national sport – less than two million people paid in 2020, out of a working population 25 times greater – and receipts represent less than 10% of gross domestic product, the lowest in the region.
This kind of deception inspires Muhammad Hanif, who runs a small car battery repair shop, to think of new ways to support his family.
“(Criminal) thoughts occupy me as to how I should achieve my ends,” he said.
“But I fear Allah, so I get rid of these thoughts.”