Dont let the flag-flying car, the deluge of invitations to seminars and the house in the Ministers Enclave fool you; finance minister Hafeez Shaikh has got a terrible job. True, in the physical sense of things, it is infinitely better than that of a brick kiln worker. But, to continue with the analogy, consider the brick kiln worker has an eerie set of employers who urge him frantically to make more bricks in lesser time, all while tying both his hands behind him.
Our chief financial mandarin faces inflation, shrinking governmental physical space, costs of the war on terror and the devastating floods, increases in the global prices of food and petroleum products. But the opposition, and more than that, one coalition member, the MQM, insist on freezing out any possibility of reform in the tax collection network (a la RGST) and also insist that the public should be shielded from the fluctuations in the international market of oil. In other words, they are not allowing the finance minister to use the tools traditionally at the ministrys disposal. All of this would require subsidies which, firstly, would necessarily divert public funds away from development projects and secondly, since there isnt enough public money to go around in the first place, would force the government to bridge the deficit by printing more money which in turn fuels more inflation. This inflation would then increase the populist sloganeering and further reduce the political space for the government to take unpopular steps.
The recent reduction in the prices of petroleum products represents just that, with the government finally bowing down to the demands of the opposition. Since the price increases were halved, as opposed to a complete slashed, some would be given to speculate psychological framing on part of the government here. There really isnt any other way to go around this issue. It is sad that the opposition doesnt recognise issues that should be above mere politics and sadder still that an increasingly populist media does not realise the gravity of the fiscal crunch the Government of Pakistan is in.
