Sunday July 21, 2024

Economy and elections

By Editorial Board
May 12, 2022

At possibly the worst time, both politically and financially, our prime minister has reached London to hold ‘consultations’ with his brother and party supremo Mian Nawaz Sharif. Prime Minister Shehbaz Sharif’s top cabinet members, including Finance Minister Miftah Ismail, are also part of his entourage and will be part of these consultative meetings. There is a sense that the meeting with Nawaz Sharif has two agenda items: elections and economy. Apart from the terrible optics this dash to London gives out, the presumed reasons behind the visit also undermine a sitting government in several ways.

With Imran Khan and his party leaders constantly playing the early election drumroll, it would be perfectly rational to think the – from Ishaq Dar to Khawaja Asif – openly hint at the possibility of early elections. This is possibly why Asif Ali Zardari’s press talk yesterday was important: with a categorical no to any election being held without electoral reforms and changes in NAB laws. Importantly, Zardari said he was saying this after talking to Nawaz Sharif. The mixed signals coming from within the coalition, especially from within the PML-N itself, are doing a great disservice to the current government. Uncertainty has never helped economic stability.

The most crucial issue at the moment for the government – more than elections or Imran Khan On A Container – is the way the economy is tanking. By most assessments, when Finance Minister Miftah Ismail went to Washington, he gave an assurance to the IMF that the previous government’s subsidies on petrol and diesel would be reversed – the IMF too had specifically mentioned the unfunded subsidies in its press release following the meeting. Despite Miftah’s commitment to the IMF, though, PM Shehbaz rejected Ogra’s summary to increase fuel prices. When reports emerged that Miftah had convinced the PM to increase these prices, Ishaq Dar gave a statement that we will not take dictation from the IMF, putting both PM Shehbaz and Miftah Ismail on the backfoot. Now we have IMF negotiations on May 18 but if we do not take any decision on this by then, where does Miftah’s credibility as a finance minister stand for the IMF? If the intention is to pull strings from London, then they need to wake up and realize that this is not 2013. Pakistan has already made commitments with the IMF. We know that Saudi Arabia has not given us anything concrete. If anything, the $3 billion given by the Saudis was on the condition that Pakistan stay in the IMF programme.

Pakistan’s reserves are $10.5 billion – not even enough for two months of import cover. If Saudi Arabia takes out $3 billion, then we will hardly be left with a one-month import cover. If there is no IMF and we are left with one-month reserves, even the World Bank or Asian Development Bank will not give funding to us. There has been talk that the Shehbaz-led government wants to complete its tenure so that it can give two budgets. This year’s budget will be a tough one with a high increase in petrol and power prices. If elections were to take place in October, the government would have to dissolve the assemblies after the budget. But if the government stays till 2023, then it will look to stabilize the economy to some extent and then go into elections after giving an election budget next year – with a tailor-made narrative of having saved Pakistan from the brink of default. But none of this is possible if the government is not allowed to make decisions on its own. For all the talk about ‘interference’, who would have imagined that the London ‘interference’ would also be something to have to be contended with? If the government is to continue dithering, it may well dissolve the assemblies right now, bring in a caretaker setup which will take tough decisions, and hold new elections in three months. A government with one prime minister and one finance minister can function but a government being run by two finance ministers and two prime ministers will be ungovernable.