File photo of P.M. Shehbaz Sharif, courtesy PMLN
Almost immediately after assuming charge, Prime Minister Shehbaz Sharif sought proposals for reducing government expenditures and overhauling the country’s economic structure. It is undeniable this is necessary amidst the prevailing economic crunch, but is far easier said than done, as vested interests will resist surgically removing entrenched comforts they have become accustomed to. In a meeting with officials concerned, Sharif also directed the adoption of digitization for the Federal Board of Revenue (FBR) “to ensure transparency in its system, increase tax collection, halt tax evasion, corruption and smuggling, and also to bring convenience to the general public and the business community.” The prime minister has also reiterated calls for austerity, asking ministers and advisers to fly economy class and forgo luxury cars and salaries to save $766 million a year. Again, this is easier said than done.
Sharif’s vow to prioritize the economy is laudable as the country continues to struggle with maintaining foreign exchange reserves, but in light of past precedent it is difficult to imagine how his proposed cuts would be fulfilled—and what impact they’ll have on the common man. While inflation declined in February to 23.1% on a year-on-year basis, it remains far beyond sustainability for the general public, which has seen ever-larger numbers slide into poverty.
The incoming government appears to be aware of this, with Punjab Chief Minister Maryam Nawaz acknowledging in her speech that even households earning up to Rs. 60,000/month were now struggling to make ends meet. The most visible impact of declining purchasing power has been a drop in savings and investment, as people tighten their belts. One economist has proposed 10 ways people can reduce their expenditures: (1) Prefer discounted groceries; (2) Reduce utility bills by conserving electricity; (3) Consider public transportation over private vehicles to cut fuel costs; (4) Explore free or low-cost entertainment options; (5) Limit dining out; (6) Optimize mobile and internet plans; (7) Cut monthly subscriptions; (8) Undertake minor repairs and maintenance tasks personally; (9) Reconsider risky investments and insurance policies; (10) Prioritize essential expenses over non-essentials. Easier said than done?