EDITORIAL: There is a pervasive aura of political uncertainty in the country today and many an independent economist has expressed concerns about this environment taking a major toll on the already fragile economy.
The obvious cause of this uncertainty is the no-confidence motion hanging like a sword of Damocles on the Prime Minister’s capacity to retain his office till the constitutional completion of his tenure by middle of next year — a capacity that is being held hostage by: (i) disgruntled Pakistan Tehreek-e-Insaf parliamentarians reportedly focused on a change of guard in the Punjab or the other 15 to 30 parliamentarians (the actual number is not yet definitively known) including those who were ensconced in ‘Sindh House’ or others who have been critical of their government’s handling of affairs of state; (ii) the allies who together hold 17 seats in the National Assembly but have yet to announce their position; or (iii) institutions that, if past precedence is anything to go by, play a role in the political process. Business Recorder has repeatedly emphasized the dominance of de facto as opposed to the more ideal de jure factors at work in our political process.
It is important to note that there is a widespread perception that all is not well in the state of Denmark and that the Prime Minister has been given some stark choices which are not acceptable to him as he considers the decision to be the prerogative of the Prime Minister.
There is also a consensus that neither the choice on offer nor his own inclination are against the national interest and therefore the tussle, if it can be so defined, is one of entrenched belief of the most appropriate way forward by the key players.
There is also a rumour circulating in the capital that if the Prime Minister concedes then the prevailing political uncertainty would evaporate; however, in the event that he does not, and many who know him well argue that his nature is probably veering him towards taking this position, and instead he takes what he regards as preemptive action then even greater uncertainty than today is a distinct possibility. The Prime Minister may reckon he has the trump card, and several of his cabinet members have alluded to it, yet he should surely be aware that in a game of cards a trump card can be over-trumped and needless to add this hapless country has witnessed this in the past.
The Prime Minister cobbled a government with 155 PTI members in 2018 that included more than 20 electables and independents with the distinction of changing party loyalties to support the one in government, with or without a nudge, and 17 from allied parties with declared links to the establishment, to reach the magic number of 172.
The joint opposition has 162 members. In other words, to remove him from office the numbers’ game is rather small (10 at best) and therefore not quite a challenge while the change in government envisaged by the opposition through a vote of no-confidence is not unconstitutional. In other words, if the vote of no-confidence is successful then it will be legal and constitutional.
Irrespective of oft-repeated claims that the state of the economy is on course towards development, and acknowledged as such by international donor agencies particularly the International Monetary Fund as Pakistan is currently in talks on the seventh review, there is an economic impasse evident from the following economic indicators: (i) the rupee, a symptom as opposed to the cause of the malaise, has eroded to 181.60 to the dollar interbank rate with the open market rate at 182 rupees (though it is unavailable at that rate) with the real effective exchange rate for January at 97 (the foot dragging in updating data under this head has been evident since 2019) being indicative of the rupee being undervalued; (ii) foreign exchange reserves held by the State Bank of Pakistan after declining to 15.8 billion dollars as of 11 March 2022 have fallen below 15 billion dollars with nearly 50 percent of the reserves backed by borrowing and/or debt equity through issuance of sukuk/Eurobonds — a decline due mainly to the widening trade deficit which was 82 percent higher in July-February 2021-22 compared to the same period the year before; (iii) nearly half of all Federal Board of Revenue collections are sourced to imports and hence the rupee erosion, being used as a shock absorber to curtail imports would also imply lower tax revenue collections in the remaining four months of the year; and (iv) meanwhile, the government’s current expenditure has broken all previous records and the PTI administration is in the process of further raising it through higher subsidies envisaged in the 28 February relief package and the amnesty and exemptions envisaged in the 1 March industrial package.
We earnestly urge the protagonists not to take measures that may endanger the country’s best interests. Such exhortations in the past have been defined in a partisan manner but the current state of limbo is certainly not in that category because the country and particularly its economy cannot afford continued uncertainty.
Copyright Business Recorder, 2022