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Home » Govt’s economic team blamed for hike in inflation
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Govt’s economic team blamed for hike in inflation

adminBy adminMarch 3, 2025No Comments3 Mins Read
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ISLAMABAD: The Government’s economic management team has taken a curious stand on the very damaging issue of inflation that the people of Pakistan have had to endure during the last two years.

The high inflation has pushed a large segment of the population close to the poverty line.

This was stated by Founder Citizens for Reforms, Aamir Mumtaz who is also former Chairman PSMA Board.

Pakistan’s inflation projected to reach 2.3% in February

He said that household finances have been worsened and personal savings obliterated with more and more people having to borrow to make both ends meet, adding that inflation has started to come down but at what cost? Higher unemployment, diminished purchasing power and further de industrialization.

He was of the view that there is a need to examine the role of the government’s economic team in causing inflation. It started with a flawed budget making process which was based on over spending.

The Government continued to practice fiscal mismanagement, run a large budgetary deficit, print large sums of money and then borrows large sums resulting in the stoking of inflation, necessitating high interest rates (to control inflation that the Government itself causes by not balancing its budget) and then ends up spending most of its revenue on debt servicing, leaving next to nothing for development initiatives.

“Whenever any Government spends more than it generates it has three options – borrow money, print money or increase Taxes. All three options usually result in higher inflation particularly if the spending is on non-productive items,” Mumtaz added.

He further stated that the Economic Team has failed to carry out serious structural reforms of the economy to make it sustainable, independent and capable of developing steadily, adding that it failed on all fronts including improvement in ease of doing business, increase exports meaningfully, address the dependency of exports on certain imports, increase investments and savings to a level in line with comparable countries, industrialize the country so it can provide employment opportunities to its youth.

He has proposed that the government should taken short term measures to balance the budget or substantially reduce the deficit by cutting expenditures, reduce borrowing and develop a plan for managing the debt and stop increasing the money supply.

In Medium Term – decouple exports from imports as much as possible, bring down energy prices by reforming the power sector and start a program to industrialize the country.

Copyright Business Recorder, 2025



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