Despite tall claims to the contrary, the Pakistan Muslim League (Nawaz) is likely to face a tough time securing its home-ground in Punjab in the upcoming general elections, as the province continues to be dominated by supporters of the Pakistan Tehreek-e-Insaf (PTI), with potential spoilers from the Istehkam-e-Pakistan Party and public opinion over the alleged Nawaz-Shehbaz divide.
Adding to its woes is the economic chaos inflicted during the former government led by P.M. Shehbaz Sharif. This isn’t a unique situation; Pakistan has a history of deep economic trouble amid portents of bad times to come. The prevailing problems are manifold, ranging from the composition of Pakistan’s overall external debt to repayment pressure in both the short- and medium-term to potential inflows that can offset the debt outflows, and Pakistan’s external debt management strategy.
Worsening the situation is Pakistan’s political chaos, with the PMLN banking on the long-rumored return of Nawaz Sharif to revive its fortunes. This is by no means certain. Nor is the PTI retaining its vote bank if Imran Khan is effectively sidelined. Regardless of whoever wins the next general elections, the direction of the country is unlikely to change. The past five years—divided between the governments of Khan and Sharif—have seen sharp depreciation of the rupee, dwindling foreign exchange reserves, and record-breaking inflation. Despite temporarily averting default, the country continues to face problems importing essentials, worsening economic travails.
The Asian Development Bank (ADB), earlier this year, projected Pakistan’s economic growth to rise to 2 percent in 2024, “assuming that the resumption of macroeconomic stability, implementation of reforms, post-flood recovery, are accompanied with improving external conditions.” The key here is an improvement in external trends that are entirely outside Pakistan’s control. To offset this uncertainty, the country needs to undertake massive reforms, including raising taxes on sectors such as real estate and agriculture, and ending all untargeted subsidies that favor the rich and poor alike. The path is clear; whether our lawmakers have the will to implement this is another matter entirely.