Economy on a knife-edge after election

With ballot-box rigging, arbitrary arrests, politicization of the judiciary, media censorship, and endless internet blackouts, democracy has become a distant memory in Pakistan. The elections held on February 8, after two extremely turbulent political years, were a sad illustration of this.

A lacklustre campaign didn’t discourage people from showing up at the ballot box in greater numbers than predicted. This was testimony to their stake in the democratic process, indicating they felt their vote mattered. The turnout defied the narrative that the election outcome was a forgone conclusion.

When the results were in, it became clear that this narrative had overlooked electoral dynamics and public sentiment on the ground.

The Election Commission of Pakistan (ECP) did not cover itself in glory with its inexplicable tardiness in announcing election results. Despite its claim that it had set up an improved system to announce results, the inordinate delay evoked sharp criticism and allegations of foul play.

Disruptions to the Internet and mobile networks added toxicity to the debate and led to justifiable condemnation from the ECP and the caretaker administration. PTI leaders claimed “winning seats had been turned into defeats.” Several Western states urged an investigation into poll irregularities.

History is witness that if the strong public mandate is stolen, the cycle of political instability will endure in Pakistan. To date, no prime minister in Pakistan’s constitutional history has completed his five-year term; the trend is likely to persist.

Based on available data released by the ECP, it is quite evident that none of the three major parties—the PTI, the Pakistan Muslim League-Nawaz (PML-N), and the Pakistan People’s Party (PPP)—won enough seats on their own to muster a simple majority and form the government. Hence, the emerging dispensation in Pakistan will be a multiparty, weak coalition in a hung parliament where enacting legislation will be a difficult task.

Due to its inherent weaknesses, the newly-formed coalition government will be heavily dependent on the establishment. Hybrid (i.e., military-civilian) rule will therefore continue in the country. The military’s resolve as a major stakeholder in the nation will be further tested by the emerging split public mandate. The Shehbaz Sharif-led government will face several daunting challenges.

The most important of all will be dealing with an economy that is still in a critical state. Soaring inflation has fueled a cost-of-living crisis, which has played into the election, with PML-N’s inability to secure a majority partly attributable to the burden of incumbency, given its record in the PDM government it led until last August.

The next government will have to expeditiously negotiate a fresh, extended programme with the IMF as the stand-by arrangement will end in April. This is urgently needed for Pakistan to meet its heavy foreign debt liabilities in the years ahead.

In addition, the new administration will have to present a challenging budget in May/early June catering to elimination of subsidies and implementation of additional levies. Similarly, the financial requirement for external payments is staggering: of a total debt of $260 billion, $116 billion is external.

Likewise, inflation, which stood at 29.7 percent in December 2023, is likely to stay above 20 percent in 2024. Meanwhile, the growth rate in 2024 will hover around a modest 2 percent, with slim chances of recovery. These economic and fiscal challenges need a powerful government. A weak dispensation will find navigating the country through these troubles difficult.

At the diplomatic level, a weak prime minister will find it challenging to end the country’s isolation and take it forward. Pakistan’s ties with Afghanistan, India, and Iran are at an all-time low.

A weak prime minister will not get much traction in India and will struggle to normalize ties with New Delhi. In the U.S. strategic calculus, Pakistan’s salience has dwindled since the withdrawal from Afghanistan. Washington’s indifference towards Islamabad is likely to continue.

Despite Pakistan’s normal relations with China, Saudi Arabia, Qatar, and the United Arab Emirates (UAE), these nations are concerned about the country’s ongoing political unrest. The state of civil-military relations would be a key factor that determines the longevity of the coalition arrangement.

Pakistan is on a knife-edge, and the three major political parties will do well to step back and evolve a political consensus through a grand political dialogue with a futuristic view of how to take the country forward. No political party alone can take Pakistan out of its current problems. The country needs to conciliate. For this, a new political consensus among the political stakeholders offers the best way forward.

Copyright Business Recorder, 2024