The fall in the value of the Pakistani rupee against the US dollar is expected to cause a surge in inflation, with petrol and diesel prices projected to increase by over Rs13 per litre due to the exchange rate, potentially reaching double digits if the dollar continues to appreciate. Additionally, the rise in dollar value will also lead to further increases in electricity tariffs, making the lives of citizens more difficult.
Protests have erupted across Pakistan due to the recent increase in electricity prices, which are causing financial strain on households already dealing with high inflation and stagnant incomes, and the government's inefficiency in reducing transmission losses and indirect taxes is exacerbating the problem.
The Pakistani government is seeking approval from the International Monetary Fund (IMF) before announcing any immediate relief for consumers protesting against inflated electricity bills, with relief likely to be provided to those using up to 400 units per month for August and September.
The caretaker government of Pakistan has increased petrol and diesel prices by over Rs14 due to the rising trend of petroleum prices in the international market and exchange rate variations.
Pakistani traders go on strike across the country to protest against the high cost of living, including fuel and utility bills and the depreciation of the rupee, leading to widespread discontent among the public.
Pakistan's economic crisis is worsening under the caretaker government, as LPG prices increase by 20% and the rupee continues to fall.
The high prices of electricity in Pakistan are a result of misgovernance in the power sector, including indirect taxes, losses in the system, expensive production, and the cost of generating electricity in new plants.
The caretaker government in Pakistan plans to provide relief to power consumers, with a reduction of Rs13,000 for those with bills ranging from Rs60,000 to Rs70,000, amid nationwide protests over increased electricity bills; talks between the government and the IMF are underway on the matter.
The main problem with electricity consumption in Pakistan is that households, rather than productive sectors like industry, are the main consumers, leading to high bills and a lack of economic growth.
Millions of Pakistanis are facing the devastating consequences of an unprecedented economic crisis, with rising inflation, soaring fuel and electricity prices, and a weakening currency, leaving low-income households struggling to make ends meet.
The Pakistani rupee's rise against the dollar is attributed to a crackdown on hoarding and illegal outflows of the greenback as well as increased vigilance in the Afghan transit trade.
Pakistan's central bank is expected to increase interest rates in order to address high inflation and bolster foreign exchange reserves, which have led to a record low value for the rupee. A Reuters poll shows that 15 out of 17 analysts are forecasting a rate hike, with some expecting an increase of at least 150 basis points. The country's economic recovery is being challenged by IMF loan conditions, import restrictions, and subsidies removal, which have caused spikes in energy prices and elevated food inflation.
The caretaker government of Pakistan has raised petrol and diesel prices to record levels, leading to a surge in inflation and impacting the prices of essential commodities, while the country continues to invest in and expand its nuclear weapons program.
Despite Pakistan's immense potential in various sectors such as energy and agriculture, the country continues to face economic injustice and elite capture, which undermines social justice and human development, according to economist Dr Hafiz Pasha; in recent months, however, the government has taken action against electricity theft, currency smuggling, and commodity hoarding to combat these issues.
The recent record-breaking increase in petrol prices in Karachi has had severe consequences for ordinary people, with many unable to afford fuel and resorting to alternative means of transportation, such as motorcycles or bicycles, while others contemplate selling their vehicles altogether.
The caretaker government in Pakistan has announced a historic hike in petrol and diesel prices, with fuel costing over ₹330 per litre, further burdening the public already facing high inflation.
The unprecedented increase in fuel prices in Pakistan is expected to cause a significant rise in inflation, with the Consumer Price Index projected to reach as high as 30% to 32% in September 2023.
