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What next for Pakistan after the painful phase?

With a deferred oil payment facility from a friendly country already in the bag, and the prime minister expecting discovery of record oil and gas reserves off the Karachi coast any moment, Monday morning's price increase in petroleum products seemed like something of an April Fool's joke. Sure, oil rose two-odd-per cent in the international market, but why did that make OGRA (oil and gas regulatory authority) suggest an almost 12 per cent hike, of which the government agreed to 6.5 per cent?
Unless PTI is pulling a PML-N, or a PPP, again - plugging revenue holes by exploiting petroleum pricing? Just this January, for example, it increased GST (general sales tax) on petroleum products from eight per cent on petrol and 13 per cent on diesel to 17 per cent across the board. Now, everybody's waiting for the second-round, cost-push inflation that expensive fuel always brings since it raises input prices across-the-board.
That's not all. Cabinet's apparently split about another OGRA recommendation urging a 144 per cent hike in gas prices from July or face a very real prospect of state gas companies going belly up. All this after consumers were rudely treated to gas bills inflated so ridiculously last month that the prime minister himself had to take notice. It's another matter, of course, that nothing came from his promises of action, addressal and so on.
Perhaps that's why the energy minister lamented at a hush-hush cabinet meeting recently - if one of the country's best business reporters' 'sources' are to be trusted - that people would not accept any reason for increasing gas prices by almost 300 per cent since PTI (Pakistan Tehreek e Insaf) came to power.
Imagine how all this looks after last week's announcement by the SBP (State Bank of Pakistan) that inflation (in March) clocked in at 9.4 per cent, the highest in five-plus years? No doubt that's why the Bank jacked up the interest rate by another fifty basis points; making it a total rise of 375pb, from 7pc to 10.75pc, in the nine months so far of the outgoing fiscal year.
In common man's lingo, that means prices have shot right back to the dark People's Party days; when the government at least had unprecedented floods and security problems to blame for the governance breakdown. Also, small and medium entrepreneurs, that the government so wants to spearhead the Naya (new) Pakistan economic revolution, will face higher borrowing costs, higher input prices, and a more limited market caused by squeezed household and industry spending. And we haven't even touched upon the unemployment bit yet.
Now, this is where contradictions in the government's economic policy spill right out into the open. The text book says that higher interest rates, other things remaining the same, invite inflows from lower-rate environments and bid up the local currency. Yet in these nine months the rupee has fallen by 15.9 per cent. And despite the finance minister's claim of the currency finally reaching fair value - he says that after every round of devaluation - the market is not pricing in a floor under the rupee anytime soon.
Also, weakening the currency is the standard go-to policy when you want to breathe more life into exports. And since PTI has been no better than previous governments in tax collection so far - nine-month target fell short by Rs318b ($2.3b) - clearly they didn't mind the devaluation gambit as long as export earnings responded. Only they didn't. And nobody seems too worried in Islamabad that trade revenue has moved only one-point-something per cent even though the rupee has gone through the floor.
The friendly loans, too, have only amounted to kicking the can farther down the road; that too at a cost, since they have to be paid back with interest. On March 25, SBP's forex reserves stood at $10.7 billion, hardly a world better than the $8 billion mark where the government found them. Turns out that the $2b each from KSA and UAE burnt out at a billion a month, and the $2.2b from China has bought the government just enough time to sign an IMF bailout program - precisely the kind Imran Khan said he'd die before accepting when he was in opposition. And the Fund has already telegraphed its direction; steep power tariffs, free float of rupee, higher taxes, all of which will surely push millions below the poverty line before things even begin to get any better.
And then there's unemployment. Since the rupee's collapsing, interest rate's rising, inflation's increasing and cost of debt, business and living is increasing, the economy is naturally stagflating - low growth, high prices. SBP's just revised expected growth for this fiscal down from 6.2 per cent  to 3.5-4 per cent. That means an increasing number of under-paid middle- and lower-income groupers, many of whom voted for PTI's promise of job creation (10 million in five years?) and what not, will now line up for the axe. And it's not like they can wave the pink slips at the grocery store next month.
Yet the prime minister insists the worst is already behind us. And the finance minister has already prepared a roadmap about benefits that will come after the 'painful phase'. Perhaps that will make the six per cent unemployment rate, going by conservative estimates, feel a little better.
Shahab Jafry is a senior journalist based in Lahore, Pakistan