In the current phase of recurring political and economic crises, a sort of buffer zone has been carved out that enables most businesses to prosper even when a country’s economy is in deep distress.

Big businesses also increase their reliance on the informal sector to reduce their cost of doing business. Some segments of the informal small businesses also expand. Similarly, the market economy has also developed its own resilience to face uncertainties in not so visible ways.

The rebasing of Pakistan’s economy shows that economic growth has been faster than officially estimated. Notwithstanding these positive trends, the political economy is being undermined by rapid erosion of social and political cohesion particularly over the past three and a half years.

Normally, a ruling party is expected to keep political temperatures down to remain focused on resolving the country’s socio-economic problems, and more so, in turbulent times as now, prompting the need for political and economic transformation.

But PTI leadership has a fatal attraction for political confrontation. To quote PML-Q leader Chaudhry Pervaiz Elahi, the PTI government never learnt how to build relationships and instead ‘ruined things with everyone including its own people.’ And most PTI political allies, Mr Elahi adds, are inclined towards the opposition.

PTI’s aggressive posture has forced major opposition parties to unite on a one-point agenda: the removal of the prime minister through a vote of no-confidence. If the opposition succeeds, it would be the first time that a prime minister would be removed not by martial law or establishment but by a democratic parliamentary process.

Implicit in a recent statement of information minister Fawad Chaudhry is the admission of the failure of the ruling party’s highly adversarial instance against the opposition. He said “democracy was not a system of extreme divisions, it was based on a consensus on certain things. It is not difficult to fight but reconciliation is difficult later. I don’t think (politics) should be so divisive that it should become difficult to talk (to each other).”

Facing a challenging political situation, Prime Minister Imran Khan has asked his close aides to refrain from making remarks against the allied parties in the coalition government.

Many of the ‘electable(s)’ and PTI allies who helped Prime Minister Imran Khan come to power are now hobnobbing with PTI’s arch-rivals. PTI has lost the opportunity to cement its ties with its allies to make participatory democracy at the federal level a success.

Mr Khan was totally unprepared to face the real economic challenges as evident from his frequent policy U-turns. That has not stopped. And no less important, he is falling back on traditional policies such as amnesty schemes pursued by his predecessors to resolve problems.

After being in power for three and a half years, the incumbent government is unable even to stick to agreements reached with the International Monetary Fund (IMF) as indicated by the latest four-month relief package.

Policymakers are constantly trailing behind the march of events, lacking a grip over the evolving situation.

Under rising domestic political pressure the relief package was announced soon after the mini-budget and immediately after and the $1 billion tranche was received by Pakistan. The finance ministry did not get IMF’s approval in prior consultations with the Fund. Now there is no cut-off date for IMF discussions

Social cohesion is also being eroded by prolonged high inflation which economists consider an important indicator that there is something seriously wrong with the economy.

Neither did PTI make any effort to evolve a charter of economy, widely seen as the need of the times because of its strong passion for solo flight.

PML-Q President Chaudhry Shujaat has urged both the PTI and the opposition to call off the power shows at D-Chowk because, given the current situation, Pakistan can’t afford this dangerous confrontation.

The threat of global stagflation, triggered by the war in Ukraine and its related sanctions, has coincided with political tensions and instability hitting a new high in Pakistan.

International experts have already warned that emerging economies will be more fragile and vulnerable to inflation and even to political instability as a result of the fallout of the Russian invasion of Ukraine.

Pakistan’s vulnerability to external shocks is enhanced because of the low level of regional economic and trade cooperation. East Asian economies have weathered regional and global shocks because regional trade integration has insulated or diluted these external shocks to a very large extent, says a former State Bank governor.

Pakistan has not been able to subdue insurgency, militancy and extremism for decades which is on the upswing. We are paying the price for keeping the tribal areas politically, economically and socially backward.

It is on the votes of the National Assembly members that Mr Khan was elected as the prime minister of Pakistan. But his principal mode of governance has been to rule the country through ordinances.

The National Assembly website shows that seven ordinances were promulgated in the government’s first parliamentary year, 30 in the second, and more than 16 ordinances have already been issued in the ongoing year. The Supreme Court has ruled against excessive use of ordinances to run the government, observing that an ordinance could only be used in ‘emergent matters.’

And the prime minister is now facing the backlash of self-assertion by a segment of the ruling party as well as political allies. Confrontation is proving counterproductive both on the national and international levels.

In just after two weeks of the Ukraine war, an eminent US economist says Western sanctions are proving to be a double-edged weapon. The fallout of global inflation on the US economy, he adds, may force the US to withdraw the sanctions to avoid their impact on the US states elections due in November.

The international oil prices have dropped on the initial hope that Ukraine and Russia talks are taking a positive turn and speculated lower Chinese demand due to pandemic-related travel ban. However, Kremlin spokesperson Dmitry Pesko says it is too early to predict the progress in peace talks. In Pakistan, the rupee continues to slide against the dollar.

The big question in Pakistan now is: does the opposition have any workable strategy to shore up the economy for the benefit of the suffering common citizens, if they succeed in toppling Imran Khan’s government? How will political fragmentation be overcome and national unity forged?

Published in Dawn, The Business and Finance Weekly, March 21st, 2022