Decades of mismanagement and instability have left Pakistan's economy struggling, and Islamabad was recently forced to sign a deal with the International Monetary Fund (IMF) to avert default.
Shops closed en masse in Karachi, Pakistan. Photo: AFP
But the global lender is demanding that the country cut widespread subsidies to reduce the cost of living. The IMF hopes to end a cycle of bailouts that has plagued the country for decades. But the move has already caused electricity and gas prices to skyrocket.
Thousands of shops closed in Lahore, Karachi and Peshawar, with banners raised in protest against "unjustified increases in electricity and tax bills".
“Everyone is joining in because the current situation has become unbearable,” said Ajmal Hashmi, president of the Lahore Town Traders Association. “Some relief measures need to be provided so that traders can continue their business.”
Businessmen hold enormous power in Pakistan, and the government faces the dilemma of pleasing the people while complying with IMF austerity measures.
On Friday, caretaker Prime Minister Anwaar-ul-Haq Kakar said people would have to pay higher bills because the country had no "second choice".
“Subsidies mean we are shifting our financial obligations into the future. Instead of solving the problem, this approach is just postponing it,” he said.
The government raised gasoline prices above 300 rupees ($1) a litre for the first time this week, and the rupee’s exchange rate against the US dollar is also at a 76-year low.
Meanwhile, new data showed annual inflation in August was at 27.4%, with fuel bills rising 8% in July.
A caretaker government has been in place in Pakistan since parliament was dissolved last month. A date for general elections has yet to be announced.
Quoc Thien (according to AFP, CNA)
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