Both the urgent and the important need to be addressed
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Political uncertainty prevails in Pakistan with the government-opposition confrontation showing no signs of abating. The battle continues in the courts with the dispute over the election date still unresolved. Opposition leader Imran Khan insists that elections in the two provinces whose assemblies were dissolved in January should be held according to the Supreme Court order. In its decision, the country’s apex court had fixed May 14 as the date for elections in Punjab. But the ruling coalition opposed this and maneuvered a Parliamentary rejection of the order. It refused to release funds to the Election Commission to conduct the polls despite three Supreme Court directives. Instead, it insisted provincial elections should be held at the same time when national elections are due – in October 2023. It has also mounted pressure on the Chief Justice to step down.
In hearings on the election issue, the Supreme Court has said it would not go back on its order for polls on May 14. But it also offered an opportunity to political leaders to come to a consensus on a common election date. If they are able to, the Court would be prepared to show flexibility, otherwise elections will have to be conducted on May 14. Most political parties indicated a willingness for dialogue but either set pre-conditions or made contradictory as well as provocative statements. PML-N also seems to be playing for time by dragging out consultations among its allies. This doesn’t augur well for serious, result-oriented talks between the ruling coalition and the opposition. Meanwhile Imran Khan has threatened that his followers will take to the streets if the Supreme Court order is not implemented.
While this deadlock persists and politics seems to reach a dead end, the economic crisis continues to worsen. While overcoming the political impasse is important, what is more consequential for the country is the fate of the economy. This requires urgent attention especially as an IMF agreement for bailout funds is still waiting to be finalized. Despite the government’s repeated assurances that all hurdles have been overcome and a deal is imminent, it has yet to be concluded. The last sticking points are resolution of the disagreement over the fuel subsidy announced by the government and Pakistan’s ability to fund the external financing gap for the remaining part of this fiscal year. The gap is estimated to be around $6 billion with $2 billion promised by Saudi Arabia and $1 billion by UAE. The finance ministry has said that this funding is now assured. But there is still the remaining gap of $3 billion, which the government will have to raise by commercial borrowing and other means. In a rather cryptic statement on April 14, an IMF official welcomed the financial support from key bilateral partners but said it looked forward to Pakistan “securing sufficient financing to support its implementation efforts.”
Both the urgent (economy) and important (ensuring political calm) have to be addressed if Pakistan is to extricate itself from the polycrisis it is struggling with.
- Maleeha Lodhi
The delay over concluding the IMF agreement has already exacted a heavy toll on the economy. This is reflected in depleting foreign exchange reserves, falling exports and the precipitous erosion of market confidence. The economy is in fact precariously poised with the fall in exports, decline in overseas remittances, inflation soaring to a 50-year high and the rupee losing record value against the dollar. Further delay in the Fund program could drive the precarious economy over the cliff.
Even if an IMF bailout is secured in the coming weeks, it will only help Pakistan tide over its current liquidity problems and not end its economic woes. The country is now mired in a classic debt trap in which it borrows more and more to meet its external obligations but this only adds to its debt burden. In the next fiscal year for example, it will need an estimated $22 billion to pay creditors. In addition, it has to pay about $2.5 billion in interest on foreign debt. This doesn’t include new inflows that will be needed to finance the current account deficit. The only sustainable way to address this is to secure debt relief. That can only happen if there is a credible government in place, empowered with a decisive mandate, which launches comprehensive economic reforms to deal with the structural sources of the country’s perennial financial crises including restructuring of domestic debt.
That makes fresh elections necessary so that a government with a fresh mandate can effectively deal with this on a long-term basis and not by band-aid, stop-gap measures. This in turn requires an end to turmoil and establishment of a peaceful environment in which elections on an agreed date can be held. It is apparent that the country’s political and economic stability are inextricably linked. Economic stability cannot be achieved in an atmosphere of political turmoil and disorder. Both the urgent (economy) and important (ensuring political calm) have to be addressed if Pakistan is to extricate itself from the polycrisis it is struggling with.
Maleeha Lodhi is a former Pakistani ambassador to the US, UK & UN. Twitter @LodhiMaleeha
