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Tuesday April 16, 2024

Coalition woes

Dar is praised for keeping the rupee stable and fighting with the IMF to stall economic reforms

By Mansoor Ahmad
February 23, 2024
This image shows an interior view of the National Assembly. — APP/File
This image shows an interior view of the National Assembly. — APP/File

LAHORE: None of the political parties have a clear program to steer Pakistan out of the current economic situation. The proposed coalition partners that will form the next government have divergent views on many important issues.

The immediate concern is who will head the Finance Ministry. The major coalition partner of PML-N has shown distrust in Ishaq Dar, who is the only man who has headed Finance in past three PML-N regimes (except a brief period when Dar had to flee to London mid-way during the last PML-N government). Dar is praised for keeping the rupee stable and fighting with the IMF to stall economic reforms. In the last coalition government led by Shahbaz Sharif, Pakistan had to pay a heavy price for his stubborn resistance to IMF proposals that delayed its program, and Pakistan had to ultimately accept more severe conditions that brought unbearable hardships for the electorate.

It is unfortunate that none of the three main political parties has an ideal person to run the finance ministry. The PPP government of 2018 first asked PML-N to lend Dar, who quit a few months later. Then they inducted Dr Hafeez Shiekh and then Shaukat Tarin, both outsiders, to look after the Ministry of Finance. The PTI government in 2018 experimented with Asad Umar, who failed miserably. He was replaced with Dr Hafeez Shiekh, who pursued painful reforms that did not suit the ruling party, and he was replaced with Shaukat Tarin, who after accepting tough IMF conditions made a U-turn of policies, nullifying reforms by Shiekh. It brought the country to the verge of default.

Apart from this issue, the coalition partners may have conflicting interests and ideologies, leading to difficulties in reaching consensus on important policy decisions. This can result in delays or a watered-down version of the reforms, hindering effective governance. Pakistan is not in a position to remain in policy gridlock.

Coalition governments are fragile, as either main coalition partners have to succumb to their demands or withdrawal of support from one or more partners can lead to the collapse of the government. This can create a sense of instability and uncertainty, which can be detrimental to economic growth and investor confidence. Parties in a coalition, if they want to be part of the government, have to compromise on their core principles and promises to accommodate the demands of their partners. This leads to disillusionment among voters and weakens the overall mandate of the government.

It makes the coalition less efficient in decision-making and implementation compared to single-party governments, as decisions often require lengthy negotiations and compromises. This inefficiency can impede the timely implementation of reforms, especially those requiring swift action. If things go wrong, which is likely, the coalition partners start engaging in blame games, shifting responsibility for unpopular decisions onto each other. This erodes public trust and makes it difficult for the government to effectively communicate its policies and achievements.

In the context of needing painful reforms, these drawbacks can make it challenging for a coalition government to successfully implement necessary changes, especially if some partners strongly oppose them. This is the time to seek divine help.