Political Crisis
Today Pakistan is politically unstable and passing through one of the most serious economic crises in recent past. Pakistan’s ruling Party Pakistan Tehreek-e-Insaf (PTI) leader Imran Khan lost a trust vote on April 10 despite his smart move to dissolve the Parliament on April 3 to evade a trust vote, a decision which Supreme Court annulled on April 7 and recommended seeking of trust vote by PTI government. The abrupt fall of Imran government is attributed to spiraling inflation, depreciation in Pak Rupee, mounting external debt as well as rampant corruption in the country.
It is an irony that Khan who himself came to power in 2018 in the name of curbing corruption was charged with the same allegation. While the current crisis was triggered by the allegations against the Punjab CM, Usman Buzdar, a close aide of Imran Khan the root cause of the political turmoil is the economic status of the country. Imran’s decision to back Punjab CM not only angered many of his party members, but also attracted criticism and blame for mismanagement of Punjab affairs. The Pakistan Democratic Movement came to streets in protest and it finally led to fall of the Imran government.
Blaming the US for Political Instability
After the fall of PTI government Imran Khan blamed the United State for scuttling the government in Pakistan. The Pak military plays an important role in Pak establishment and formation of government, mainly represented by the political elites. Imran Khan was installed in government by the establishment, but when he fell out of favour, was ignominiously dumped. Then the establishment turned to a new favourite who happens to be Shehbaz Sharif. In Pak establishment there is a long history of civil-military antagonism. Analysts believe that the change in Pak government did not take place as a result of a mass movement grounded in popular discontent, but he was removed because one section of the political elite prevailed over the other, aided by the ‘neutrality’ of the establishment, often dominated by Pak military. With Shehbaz Sharif emerging as the leader of opposition parties, the power relations between the political elites and the military establishment seem to have arrived at an equilibrium, how long will it last is difficult to anticipate.
Imran Khan steered clear of publicly dragging the Pak institution made up of political elite, military and other dominant institutions in his fight with the Opposition. Instead he named an outside power and higher power, the United States as the main conspirator of the regime change in the country. Analysts believe that the allegation against the US was an escape route to avoid blaming the Pak establishment which has always been behind regime changes in the country. The military establishment remains the hegemon in the political arena of Pakistan. Its interventions and interference have become a constitutive as well as a regulative feature in the management of political actors of Pakistan.
Pakistan Prime Minister Imran Khan blamed a foreign conspiracy to topple his government. Way back on March 27 while speaking in a public rally about a “letter” from a “foreign power” as “proof” of the conspiracy. He accused Pakistani opposition parties of colluding with the West to oust him. However, the U.S. State Department denied these reports and said “there is no truth to these allegations.” Abdul Basit, Pakistan High Commissioner to India and former ambassador to Germany said, “Bringing foreign policy into the public domain could be disastrous and the government’s position on this matter is damaging for Pakistan”. By November 2022 Imran Khan realized the futility of using the pretext of US conspiracy to cover up his failure to combat corruption and staving off the Pak economy from crisis. He also stated that only early election could resolve political problems of the country.
The Demand for Fresh Elections
Imran Khan by this time realized that his demand for fresh elections in the country is not fructifying due to calculations of the opposition parties, who might not be finding the moment opportune and right for elections. It is because Imran Khan was getting an overwhelming appeal and response of Public to his rallies. He also claimed that PML-N supreme leader Nawaz Sharif was pushing the country towards disaster by “not allowing” Prime Minister Shehbaz Sharif to hold transparent elections in the country. He added. “It is a matter of grave concern for the whole Pakistani nation that a person convicted by the Supreme Court is poised to take decisions about the future of Pakistan that includes the appointment of a new army chief.”
Political and Economic Developments Since Imran Government Fell
- Since April 2022 Imran Khan has led a popular opposition movement against the incumbent coalition government and the military, staging a series of large rallies across the country through the year. The present state of Paistan could be summarized as follows:
- The struggle for power in Pakistan continues into 2023. While the incumbent government has not ceded to Khan’s demand for early elections, country-wide elections are constitutionally mandated to be held by October this year.
- The political stability is still a far cry due to incumbent government’s efforts to suppress Imran Khan and other opposition leaders. Khan’s party did very well in a set of by-elections held in July and October. The Pak state has tried to enmesh Khan and his party in legal cases, relying on a familiar playbook used against opposition politicians in Pakistan, albeit to limited effect, with the courts’ involvement.
- Pakistan’s economy has been in crisis for months, predating the summer’s catastrophic floods. Inflation is backbreaking, the rupee’s value has fallen sharply, and its foreign reserves have now dropped to the precariously low level of $4.3 billion, enough to cover only one month’s worth of imports, raising the possibility of default.
- Pakistan may end up avoiding default for the time being with IMF help and loans from friendly countries, especially Saudi Arabia, UAE and China. But those won’t address the underlying malaise of the economy.
- Pakistan is still not appearing serious about carrying out fundamental reforms needed to end the vicious cycle of economic crisis which it faces after few years on regular intervals. None of Pakistan’s political parties seems to have the political will or ability to bring about such changes, viz, doing away with subsidies on electricity and transport and raise taxes.
- Pakistan’s external debt has swelled overtime beyond unsustainable level. Pakistan must reportedly pay back $73 billion by 2025; it won’t be able to do so without debt restructuring.
- As described by incumbent Prime Minister of Pakistan, “monsoon on steroids” – directly linked to climate change – caused a summer of flooding in Pakistan brought destruction and catastrophe not seen in the country’s history, which left left a third of the country under water – submerging entire villages – killed more than 1,700, destroyed homes, vital infrastructure, and vast cropland, and left millions displaced.
- More than four months after the worst of the flooding, nearly 90,000 people are still displaced from their homes, and the floodwater is still standing in some areas. It would be enormously difficult for any country to recover from such a disaster and rebuild lost infrastructure, including roads and schools, let alone a government dealing with a cash crunch like Pakistan’s.
- A donors’ conference Shahbaz Sharif co-hosted with the United Nations Secretary General Antonio Guterres in Geneva on January 9 raised pledges for more than $9 billion for flood recovery over the next three years (the money is mostly in the form of project loans). It was less than amount expected from the international donors, i.e. half ($ 16 billion) of the projected cost of reconstruction at $ 33 billion. The rest of the amount of the projected cost Pakistan claimed would be mobilized domestically.
- The biggest problem at this time facing Pakistan is the threat of an imminent default on external payments.
- Another problem is increasing insecurity in the country. The Pakistani Taliban (or TTP), the terrorist group responsible for killing tens of thousands of Pakistanis from 2007 to 2014, have been emboldened – predictably so – by a Taliban-ruled Afghanistan, and once again pose a threat to Pakistan.
- Another problem facing Pakistan is civil- military relationships, which is like a hide and seek game- blow hot, blow cold in quick succession, one of most important reasons of political instability.
- Pakistan has a new chief of army staff as of November 29 last year. General Asim Munir replaced General Qamar Javed Bajwa, who had held the all-powerful post for six years (due to a three-year extension). The appointment of the army chief was a subject of considerable political contention last year; a major part of the reason Khan was ousted from power was his falling out with the military on questions over the appointments of top army officials.
- The financial woes of Pakistan are mounting. The countries total foreign debt servicing is projected to climb up to $23 billion for the FY 2022-23 as repayment of commercial loans has now assumed a major chunk of the outstanding amount of $6 billion out of the total obligations. Pakistan will have to repay on account of amortization and mark-up amount owed by the public sector alone to the tune of $49.23 billion over the next five years period from 2022-23 to 2026-27. If the total projected repayments are added to it by 2025, Pakistan’s repayment liabilities for external loans would be over $ 75 billion.
IMF Bailout
The only way out for Pakistan at present is completing the ninth review of the Extended Fund Facility of the International Monetary Fund ((IMF). In 2019, the IMF agreed on a $6 billion bailout package to prop up the country’s struggling economy. The assistance is seen as crucial for Pakistan, which is currently struggling to cope with massive financial and human losses caused by a devastating spell of rains and floods. On August 2022 the Executive Board of the IMF completed the combined seventh and eighth reviews under the Extended Fund Facility (EFF) for Pakistan, allowing the authorities to draw the equivalent of SDR 894 million (about US$1.1 billion). The Board’s decision allows for an immediate disbursement of SDR 894 million (about US$1.1 billion), brought total purchases for budget support under the arrangement to about US$3.9 billion. This requires that Pakistan fulfills IMF conditionality. The immediate priority is to continue the steadfast implementation of the recently approved budget for FY23, adherence to a market-determined exchange rate, and pursuit of a proactive and prudent monetary policy. Under the conditionality Pakistan authorities have taken important measures to address Pakistan’s worsened fiscal and external positions resulting from accommodative policies in FY22 and spillovers from the war in Ukraine, and which have placed significant pressure on the rupee and foreign reserves. But much remains to be done such as removal of power subsidies and steps to enhance tax revenue by doing away with various tax concessions.