Pakistan’s electricity bill protests: More shocks to an ailing economy
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The outburst of nationwide protests over excessive electricity bill amounts have brought to the surface the anguish of the masses who, afflicted by the rising cost of living, have been pushed below the poverty line by the millions while unemployment has swelled. A country of 240 million people faces the dire prospects of economic meltdown.
With spiralling inflation, the value of the rupee against the US dollar has plummeted to record lows and is still sliding. The devaluation of the rupee has badly affected the business and industrial sector. Growing economic woes and public discontent has further increased political instability rendering the situation extremely volatile as the country enters election period.
Angry protesters are now out on the streets threatening to bring the country to a halt. The spontaneous outburst of public anger has the potential of turning into a mass movement against the existing system. With a caretaker government at the helm, there is complete chaos in power corridors.
Stuck between the IMF deal and growing unrest in the country, options for the interim set-up are limited. Pakistan reached a Standby Agreement (SBA) with the IMF in July this year that would provide USD 3 billion spanning nine months, that prevented the country from sovereign default. But the lending came with stringent conditionalities that included an increase in utility tariffs.
However, it’s not just the increase in electricity charges but the multiple taxes and surcharges that has made the bills extremely unbearable for common people. A state unable to collect taxes from the politically powerful landed and business classes has burdened an already overtaxed middle and lower middle class.
The state is still not willing to remove tax exemptions given to thriving real estate businesses and retailers. Hence the intense public reaction has not come as a surprise. What has made the situation more complex is the kind of leadership that has been put in place for the interim period with little understanding of the gravity of the situation.
Just a few months are left to elections, but economic and financial reforms are not on any party’s agenda.
Zahid Hussain
As a countrywide shutter-down strike paralyzed life in the major cities, interim Prime Minister Anwar-ul-Haq Kakar wondered why people were out on the streets over what he called a “non-issue.” His outrageous comments demonstrate the lack of any perception of exploding mass unrest.
Such remarks also expose the powers that be, which have put an obscure senator with no experience in the coveted post. Given Kakar’s political affiliation and patronage, it is not hard to guess whose choice he is. His elevation to the top signalled the country’s transition from hybrid rule to a virtual takeover by Pakistan’s powerful security establishment-- with a civilian face. Now a novice leadership is left to face the public’s wrath.
The crisis over excessively priced electricity indicates a structural problem that has been aggravated by flawed policies pursued by successive governments over the past several decades. A patch-up job will not help resolve a chronic problem that requires massive systemic reform. And that is beyond the capacity of a short-term interim arrangement.
There is now growing public sentiment against the privileged power elite, and it threatens to bring the entire system down. The public’s outrage over inflated electricity bills is the symptom of a much deeper problem. It is perhaps one of the most serious situations the country has faced in recent times. The prospect of the country collapsing under its own contradictions is frightening. In the words of the interim finance minister, Pakistan’s economic situation is “worse than anticipated.”
Meanwhile, a damning recently released IMF report pointing out “exceptionally high” risks and multifaceted challenges to our economy should have been a wakeup call for our rulers, but that was not to be. The country is struggling with stagflation, with a rapidly falling economic growth rate and runaway inflation. Increasing unemployment has created very serious economic and social problems. Taking hard decisions are avoided because of political reasons, thus jeopardising the country’s future.
Just a few months are left for the elections, but economic and financial reforms are not on any party’s agenda. Our electoral politics largely revolve around gaining control of state patronage. Therefore, it seems hard for our ruling elite to break away from their narrow interests and move towards a sustainable and self-reliant course.
The political instability has further underlined the severe challenges that the already ailing economy faces. Widespread protests against inflated electricity bills could easily ignite a mass uprising. This growing public unrest is a warning to the ruling elite, if it is willing to pay heed.
— Zahid Hussain is an award-winning journalist and author. He is a former scholar at Woodrow Wilson Centre and a visiting fellow at Wolfson College, University of Cambridge, and at the Stimson Center in DC. He is author of Frontline Pakistan: The struggle with Militant Islam and The Scorpion’s tail: The relentless rise of Islamic militants in Pakistan. Frontline Pakistan was the book of the year (2007) by the WSJ. His latest book ‘No-Win War’ was published this year. Twitter: @hidhussain
