Pakistan has been facing a number of challenges, both economic and political, in recent years. The political crisis has only added to the existing economic woes, creating further uncertainty and instability.
The current situation has been exacerbated by a divided judiciary of the Supreme Court, which has created a polarized environment and made it difficult to reach a consensus on key issues.
The uncertainty surrounding the election schedule has only added to the problem, causing a loss of investor confidence and making it difficult for the country to attract foreign investment. While the constitution mandates that elections for the National Assembly should be held by October 2023, the dissolution of two Provincial Assemblies ahead of schedule and judicial orders to hold early elections have made the situation untenable.
Polls conducted by Topline indicate that a majority of respondents believe that elections will be held before October 2023 or in October 2023, while a minority believe that they will be delayed. If elections are held as scheduled, there is a high probability that the Pakistan Tehreek-e-Insaf (PTI) led by Prime Minister Imran Khan may win the most seats in the National Assembly.
However, there is also a risk that Khan may be disqualified due to under trial cases against him, which could lead to a party breakup. Another scenario that is being discussed is the possibility of the present coalition government extending its term beyond October 2023 by invoking Article 232 of the constitution under the pretext of security concerns or financial crisis.
Both of these scenarios could lead to further political instability and uncertainty, which could have a negative impact on the economy and the currency. One possible solution to this problem is for political parties to engage in dialogue to find a mutually acceptable solution regarding the elections for the national and provincial assemblies.
Once the political situation has stabilized, the focus can shift back to the economy. The short-term rollovers of external debt have been identified as a crucial factor in Pakistan’s debt restructuring. External debt restructuring will be a litmus test for the new government, and how it is done will determine the country’s economic vulnerabilities.
Pakistan should ideally try to convert its short-term external loans to long-term loans with the help of friendly countries like China, Saudi Arabia, and the UAE. If this is not possible, the country should consider the G-20 common framework for debt restructuring, which is less painful and could help in economic recovery.
In conclusion, Pakistan is facing a challenging situation both politically and economically. However, there are solutions available, such as engaging in dialogue to find a solution to the elections-related issues, and restructuring the country’s external debt in a sustainable manner. If these challenges are addressed in a timely and effective manner, Pakistan can overcome the current crisis and move towards a more stable and prosperous future.
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