The first review of the Stand By Arrangement, by the IMF is around the corner. While the review entails an account of how Pakistan is doing on its commitments, the fund has traditionally had a tight noose around the country’s fiscal expenditure. Not only that, the fund also has tight conditions in place pertaining to Pakistan’s tax revenue targets, and how they are to be achieved. One of these has been increasing direct taxation on essential goods such as petroleum levy, electricity and gas tariffs etc.
However, in the current flow of high inflation that has come as a direct result of these moves made under the IMF program, it is the common man that has to face the music, be it in costlier electricity or expensive petrol.
This time around, gas prices are expected to go up by 50% across the board to meet one of the key conditions of the short-term IMF loan facility. Earlier this year, the gas tariffs were raised by 113% making it very difficult for citizens to manage their day-to-day gas usage. According to media reports the IMF has been very persistent and concise about this new demand since the start of August. The hike of gas prices by almost 50% is most likely to come in effect before the start of winter season.
It is reported that senior officials of the petroleum and finance departments as well as the Oil and Gas Regulatory Authority (Ogra) put their heads together here on Monday to finalise the gas increase by 45-50%.
While the government has its hands tied on controlling the raise in price, there might still be something left that the interim setup could manage to do by themselves. In this scenario, the interim setup is looking towards a direct subsidy, particularly for the low income households of Balochistan.
During winters, temperature drops considerably, to the extent of making it difficult to survive in the province. Under such circumstances an increase in tariff might just be chronic for the people of Balochistan. As per media reports, the government is considering a direct subsidy, as opposed to the current cross subsidy for the lower income households of the Balochistan region.
The government is likely to provide this subsidy in the form of cash handouts through Benazir Income Support Program (BISP) database.
While the direct subsidy based on BISP database is questionable insofar as the viability of the database, it also begs the question of whether the government will provide a similar subsidy to the financially downtrodden people of other cold regions.