By Ihsan Narejo
At a time when the entire world is caught in the grip of an economic crisis, tensions between the United States and Iran have not only negatively affected the economies of several countries but have also severely disrupted the economic policies of many nations. While Israel’s aggressive policies are creating further difficulties for Arab countries, the ongoing confrontation and tensions between the United States and Iran over the Strait of Hormuz have not only created serious risks for countries around the world but have also shaken the economic foundations of developing nations.
Due to the changing world order, markets in Europe and Asia have suffered significant setbacks, and at present there appears to be no clear sign of immediate improvement. China and Russia’s apparent reluctance to directly intervene in the Middle East conflict is giving the United States greater room for aggressive action. However, if China and Russia become directly involved, the possibility of a wider global conflict could increase significantly.
In such circumstances, it is extremely difficult for developing countries like Pakistan to continue long-term policies and reforms, because Pakistan’s economy largely depends on the International Monetary Fund (IMF) and other international financial institutions. When these institutions provide loans to developing countries, they also influence their economic policies. Since these financial institutions are largely associated with wealthy and developed countries, they may not always have a complete understanding of the ground realities of developing nations. As a result, policies influenced by them can sometimes conflict with the aspirations and needs of ordinary citizens.
If we examine the current situation closely, the IMF’s influence on Pakistan’s economic policies and decisions appears to be substantial. Critics argue that the IMF and other such institutions effectively function as a new mechanism through which powerful global interests influence developing countries.
Amid the latest developments in the Middle East and the changing global order, Pakistan, as an Islamic country, faces not only new challenges but also the difficult task of protecting its national interests and making decisions based on ground realities while maintaining relations with neighboring and global powers.
Today, as the conflict between the United States and Iran has contributed to an increase in global oil prices, Pakistan has also been unable to remain unaffected by this rise. However, it would also be fair to say that Pakistan’s difficult economic circumstances are linked not only to international developments but also to the influence of international financial institutions and the financial commitments made by the country.
The people of Pakistan are understandably concerned about why petroleum prices continue to rise. The issue, however, is not solely connected with the conflict between Iran and the United States. The repayment schedule of the installments agreed upon by the Government of Pakistan while obtaining loans from the IMF is also an important factor.
In the changing global environment, Pakistan is facing additional financial pressure as support from traditional partners has become more limited. If China is not providing additional loans, Saudi Arabia is not extending dollar assistance, and the United Arab Emirates is seeking to withdraw rather than provide additional financial support, the government faces difficult choices. One of the consequences can be an increase in petroleum prices to meet financial obligations and maintain external payments.
This is one reason why the government repeatedly increases petroleum product prices in order to manage its financial commitments.
While the country’s businesses and economy are facing difficulties, ordinary citizens and small business owners are also under severe financial pressure. In such a situation, the relief announced by the Prime Minister for the poorer sections of society in response to rising fuel prices appears to provide some hope amid difficult circumstances.
As part of the expansion of the Prime Minister’s relief package, registered motorcycles, Qingqi rickshaws and other rickshaws have also been included. Under the package, eligible users may receive special relief of up to Rs. 500 per week on petrol.
Motorcycles, Qingqi rickshaws and conventional rickshaws are predominantly used by lower-income and economically disadvantaged sections of society. Therefore, this decision could provide some relief to people at the lowest levels of the economic structure.
The government has also decided to provide a discount of Rs. 100 per litre on up to 30 litres of petrol per month for vehicles with engines up to 800cc. This measure is intended to provide relief to the middle class.
To enable eligible citizens to access the facility, the government has introduced the free 9771 SMS service so that people can benefit from the scheme without paying any additional charges.
There is no doubt that the government’s stated intention is to provide relief to ordinary citizens and the poor. However, some petrol pump owners may attempt to create obstacles in the implementation of this relief initiative. It is therefore the responsibility of the relevant government authorities to take action, without discrimination, against petrol pump owners who violate or obstruct the implementation of this pro-poor decision.
There is strong hope that the government’s petrol subsidy or relief package will prove beneficial for lower-income sections of society.
This is not the first time that Pakistan has faced such difficult circumstances. Similar challenges also emerged during the Afghan War era. Difficult times, however, do not last forever, and with the cooperation and support of the people, the government can overcome such challenging periods.
The need of the hour is not only to understand the government’s difficulties in the context of the global rise in oil prices but also to avoid unnecessary travel and the excessive use of petrol.
In this regard, the government is also expected to introduce austerity measures, which could help the country cope with the current economic crisis.
At a time when both the global and domestic economic environment remains challenging, every institution and every citizen must play a responsible role. Relief measures for the poor, prudent economic management, austerity, and responsible use of fuel can collectively help Pakistan navigate through these difficult circumstances.
ihsannarejo@gmail.com