EDITORIAL: Moody’s Investor Services’ warning that a timely announcement of the election results is crucial for Pakistan facing “very challenging economic macroeconomic conditions with fragile balance of payments, weak growth and high inflation” must be urgently heeded, by all stakeholders.
The stock market, constantly cited by Pakistan’s economic team leaders as indicative of the state of the economy, though the market players are very few in number, plunged by 3.8 percentage points and the dollar- denominated government bonds by as much as 2 cents Friday past with Tradeweb data revealing that sovereign bonds slipped with the September 2025 bond dropping to 85 cents on the dollar.
Two observations on this data release are relevant. First, the data is from external sources and may be a reflection of the collective concerns voiced by the US, the UK, Australia and the European Union at the electoral process and their demand for a probe into reported polling day irregularities.
There was a reference to pre-poll rigging with the EU statement noting a lack of a level playing field due to inability of some political actors to contest the elections while the US referred to “undue restrictions on freedom of expression and assembly” and violence and attacks against the media.
While the three friendly countries notably China, Saudi Arabia and the United Arab Emirates have not commented on Pakistan’s recent electoral experience — countries which have strengthened Pakistan’s foreign exchange reserves through parking billions of dollars with the State Bank of Pakistan and extended budgetary support with pledges of more than 20 to 25 billion dollar direct investment inflows in the foreseeable future — yet what is critical to note is that: (i) Pakistan’s major export market last fiscal year was the US at 19 percent share, followed by 17 percent combined for Germany, Spain, Italy and France and the UK at 7 percent; (ii) a total of 37.4 percent remittances were from the West – 11.1 percent from the US, 11.4 percent from the EU and 14.19 percent from the UK — inflows that are more resilient than those from the Arab countries; (iii) the chair of the board of directors of all multilaterals is a declared prerogative with the World Bank president selected by the US government, the International Monetary Fund Managing Director by Europe and the ADB President by Japan and their government’s input on loans/programmes is well documented; and (iv) most of the reliance on commercial loans as well as debt equity notably issuance of sukuk/Eurobonds is on the West. And given that all the three major international rating agencies are headquartered in the US, including Moody’s, their rating does have a major impact on Pakistan’s capacity to borrow from external commercial banks/equity markets. In other words, to dismiss the collective concerns of the West would be ill advised, given the current state of the country’s economy.
Second, and equally importantly, given that the consensus of the Western nations on our recent polls has been one of concern with calls to investigate the irregularities any attempt to ignore, disguise or sugarcoat it would not be possible.
The Foreign Office’s statement is best seen as a pro forma in which it expressed surprise over the negative tone in statements by certain countries and their demand for a probe as interference in our polls, adding that the country was committed towards building a vibrant democratic polity.
Be that as it may, the removal of Form 47, inexplicably divergent from Form 45 that was signed and issued to the contenders polling agents, has been removed from the Election Commission of Pakistan website and may, one hopes, be indicative of better sense prevailing.
It must be acknowledged by all stakeholders that control of information is no longer an entitlement of any government, and that alternate sources of information do surface that may or may not always be accurate but that can charge a citizenry seeking a voice for its vote.
To conclude, it is unclear whether the ongoing political uncertainty that has deepened since 8 February poll results, will be tackled through the past practice of getting the independents to abandon ship, a policy that political parties may be embarked on at present, or whether better sense will prevail and a rapprochement sought with the ‘independents’, however onerous that prospect may seem at present, in the larger national interest, more specifically economic interest.
Those who are expressing satisfaction at the performance of the caretakers need to look at the numbers: no access to the budgeted 6.1 billion dollar inflows commercial loans and debt equity as the rating agencies have not upgraded Pakistan after the completion of the first Stand-By Arrangement review and it should be a source of concern if the country’s rating is downgraded further; domestic borrowing has been raised to unprecedented levels reaching a high of 90 percent in just the first half of the current year in comparison to what was borrowed during July-June 2022-23; and a growth led entirely by higher crop output, a natural outcome after a flood year, though industry is lamenting its lack of competitive edge in the international market with the current batch of team leaders referring to high frequency data to claim that there has been an upward movement in output without mentioning the very low base the year before.
Inflation and unemployment are continuing to erode the quality of life and with sentiments already high the country cannot countenance any turmoil that would derail the fragile state at which the economy is poised.
Copyright Business Recorder, 2024
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