The government on Friday approved Rs1 billion in advertisement budget to highlight its economic performance and contain growing negativity against its policies amid Ministry of Finance’s forecast of a further surge in inflation next month.
Finance Minister Dr Abdul Hafeez Shaikh chaired a meeting of the Economic Coordination Committee (ECC) to approve the budget two days after the International Monetary Fund (IMF) revived Pakistan’s bailout package.
The IMF has revived its loan programme after Pakistan agreed to impose over Rs700 billion in new taxes from July and collect Rs884 billion from electricity consumers through a 36% increase in power tariffs – the two measures that are highly inflationary.
The ECC considered and approved a technical supplementary grant for allocation of funds amounting to Rs1 billion for launching advertisement campaigns by the Ministry of Information and Broadcasting to inform and educate people, particularly during the third wave of Covid-19 for the public good, announced the Ministry of Finance on Friday.
The ECC summary showed that the money would be given to positively show the government’s economic performance, which the information ministry said remained “under-projected”.
The summary also claimed that various government programmes were not adequately projected in the media.
Success stories of the government, which among many include attracting record remittances, improving foreign currency reserves to record level, keeping the current account balance in positive territory, enhancing exports while containing imports, encouraging Madein-Pakistan products, record growth in large-scale manufacturing, revival of construction sector, improving environmental degradation, reforming tour and travel infrastructure and scores of success stories in many other fields had not been properly advertised in the print and electronic media, said the information ministry.
However, many of these successes like increase in exports and decrease in imports were contested by the State Bank of Pakistan.
The ECC approved the Rs1 billion additional budget the day the Ministry of Finance hinted at a surge in inflation.
In its monthly bulletin, the finance ministry said that next month inflation “is expected to remain between 7.9% and 9.5%”.
The Consumer Price Index (CPI) recorded an increase of 8.7% year-on-year in February – a three-percentage-point increase in a single month due to the government’s policy measures. Inflation is directly hurting every household and no media campaign can lessen prices of electricity, sugar, wheat and wheat flour.
“When a government takes shelter in advertisement, it means it has failed to perform on the economic front,” said Dr Ashfaque Hasan Khan, former adviser to the finance ministry, while speaking at Express News show – The Review.
The finance ministry said that recent developments in inflation showed that the declining trend observed in recent months was interrupted in February. Both yearly and monthly inflation increased, it added.
The ministry said that international commodity prices were also recently on a rising trend, especially oil prices and food prices, however, the government had not transferred the burden of increase in petrol prices to the general public.
Signs of inflationary pressure are building as a key global gauge of companies’ input cost inflation rose to its highest for over 12 years in February, feeding through to the largest increase in average selling prices for goods and services for over a decade.
It said that global commodity prices continued to surge in February, with energy commodities jumping 14.3% and non-energy commodities rising 2.5%.
In this inflationary pressure and slowing economic growth, Pakistan has signed a pact with the IMF that promises to increase electricity prices 36% or Rs5.65 per unit in six months and introduce new taxes of over Rs700 billion from July.
The Ministry of Finance also said that the downside risk to cotton production would hamper targeted growth in the agriculture sector. This would not only impact growth but would also push the commodity prices higher.
The ministry said the growth of industrial activity was in line with the strong cyclical recovery observed in Pakistan’s main trading partners. It is expected that this recovery will continue in the coming months, provided the absence of a new upsurge in Covid-19 that may require restrictions on economic activity.