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Sunday May 29, 2022

Oil price hike or dissolution of NA – key decisions expected next week

The PMLN has yet to announce its decision after the three-day-long detailed consultation with the party leader Nawaz Sharif in London

May 15, 2022
Former premier Nawaz Sharif meeting PM Shehbaz Sharif in London. Photo: Twitter
Former premier Nawaz Sharif meeting PM Shehbaz Sharif in London. Photo: Twitter

ISLAMABAD: The coming week is critically important for the country as Prime Minister Shehbaz Sharif will either take the tough decision of raising fuel prices or dissolve the National Assembly.

PMLN sources say that both the options are still on the table and there is a proposal of inviting all the different stakeholders, possibly to a special National Security Committee meeting, for a consensus decision on the economy and new elections.

The PMLN has yet to announce its decision after the three-day-long detailed consultation with the party leader Nawaz Sharif in London. The economic condition of the country is alarming and needs radical and tough decisions to avoid a default.

The sources said that Nawaz Sharif was told that if tough decisions are taken, the PMLN-led coalition would have to pay a high political price. The new government has no guarantee of continuing until August 2023 as the options being discussed see elections being held as soon as in October this year.

Staying in the government for three to six months could be disastrous for the PMLN as there is no escape from taking tough and unpopular decisions, including the withdrawal of the oil subsidy, which would lead to a phenomenal price hike.

The London huddle discussed whether the PMLN should dissolve the assembly now or complete the full term (till August 2023), which is only possible if the government takes the difficult decisions.

It was also suggested that Prime Minister Shehbaz Sharif should initiate a national dialogue to inform all the stakeholders -- including political parties, the establishment, media, judiciary etc -- about the grave situation of the economy and the need to take urgent decisions before Pakistan ends up in a much deeper economic crisis. Such a move will help shift the onus of the decision on all stakeholders.

It was also discussed that without any delay, the prime minister could also convene a meeting of the National Security Committee where the president, chairman Senate, speaker National Assembly, provincial chief ministers, Chief Justice Pakistan, chief justices of the high courts and others, should be specially invited to discuss the economic issues. The same forum, it is said, could even decide the dissolution of the National Assembly and date for the next elections.

Although, Nawaz Sharif was not keen to shift the burden of fuel costs to the masses, he was told that there was no option but to increase the petrol and diesel prices. It was pointed out that there is no country except Pakistan in the world which subsidises fuel.

It was said that if the government does not increase the fuel prices, Pakistan will default in three months and the rupee will nosedive resulting in high inflation. In such a situation, the meeting was warned, Pakistan may face a much worse situation than what is happening in Sri Lanka.

It was also discussed that without the IMF programme, Pakistan’s economy could not avoid a default as loans and financial assistance of all friendly countries and the international financial organisations are linked to meeting IMF conditionalities, which include withdrawal of the oil subsidy.

It was also discussed that if the Shehbaz Sharif government withdraws the subsidy on petrol price and meets other IMF conditionalities, even then the government will have to renegotiate the IMF conditions in August this year.

The meeting was told that there is no assurance, even if the government could survive till August, as the options being discussed are elections in September or October.

Nawaz Sharif was told that if the PMLN government does not want to increase the fuel prices to avoid shifting the burden on the masses and check a further price hike, it is better to dissolve the assemblies and go for fresh elections.

In case the government decides to increase the fuel prices and to pay the political price, Nawaz Sharif was told, the government needs to work at full throttle and think of out-of-the-box solutions over the next 15 months and deliver the level of governance and an economic turnaround required to win the elections.

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