Austerity and Renewables

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A new IMF-approved tax regime is crippling Pakistan’s green energy sector

Lee Harris in Phenomenal World: After weeks of rising domestic pressure, a spiraling economic crisis, and the swift loss of crucial military support, Pakistan’s Prime Minister Imran Khan was removed from office last weekend following a vote of no confidence. The political turmoil is the latest in a worrisome series of events in the country—the price of food has risen sharply in recent months, along with gas and other essentials. And Pakistan’s rupee plummeted against the dollar, raising concern that higher bills for basic imports may deplete its dollar reserves.

Khan’s erratic style went from being seen as an asset—bucking pressures from Western lenders—to a liability, ​​as the government reversed course on key policies and contributed to heightened economic instability. In a speech following his election, Khan’s successor, interim Prime Minister Shehbaz Sharif, said the former cricket player and socialite had run a government that was “corrupt, incompetent and laid-back.”

His dismissal comes as the war in Ukraine and rate hikes by the US Federal Reserve pose immense challenges for heavily dollar-indebted developing countries. A late January poll found that two-thirds of Pakistanis considered double-digit inflation to be the biggest problem facing the country. But tens of thousands protested across the streets of major cities on Sunday night, showing their support of Khan and echoing his unsubstantiated claim that the ouster was a result of US meddling. More here.

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