Pakistan: Inflation clocks to 13.76% in May, highest in two-and-half-year
Islamabad (Pakistan), June 2: Pakistan's inflation rate reached 13.76 percent in May, the highest in two-and-half-year.
Inflation has been high for several years now, however, the latest round owes in no small manner to Islamabad's own peculiar decision-making process, the Daily Times reported.
A few highly remarkable schemes of the previous Pakistan Tehreek-e-Insaf (PTI), led by Imran Khan, such as the health card, relied on huge financial handouts from the government, putting unnecessary pressure on reserves at a critical time, increasing the pressure to borrow more and driving up prices.
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Shaukat Tarin's first budget as Finance Minister of the PTI, which abruptly deviated from IMF prescriptions, contradicted the SBP's tight monetary policy and took a very expansionary fiscal position, also created false expectations and caused investors to lock in deals that had to be rolled back when the mini-budget was presented, according to the Daily Times.
Furthermore, the decision to freeze gas prices in February for solely political reasons exacerbated the current account deficit and stalled the bailout program.
The newly formed Pakistan Muslim League-Nawaz (PML-N) government which is led by Shehbaz Sharif also did not help matters with its own paralysis. The government delayed the decision to raise prices to prevent a political backlash, only to bow to the inevitable after losing precious time.
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-PTC News
