WHILE the Stand-by Arran­ge­ment with the IMF helps Pakistan to avert debt default, it is a temporary reprieve that provides only limited breathing space. The short-term arrangement will momentarily restore some confidence. But a fundamental change in policy direction is needed if the country is to address its economic crisis on a sustainable basis and establish durable economic stability. Financing requirements to meet external debt obligations are an estimated $25 billion this fiscal year. This necessitates mobilising additional funds. It means Pakistan will have to negotiate a longer-term funding deal with the IMF down the road.

In any case, an IMF programme is necessary but not sufficient for the country to achieve economic recovery and embark on a path of growth. A comprehensive set of home-grown structural reforms are needed for Pakistan to escape from the vicious cycle of high budget and balance-of-payments deficits, slow growth, low savings and investment, excessive borrowing, rising indebtedness and soaring inflation. The cost-of-living crisis fuelled by the unprecedented level of inflation has placed an onerous burden on people. The public’s greatest expectation from their government is that it competently manages the economy to alleviate their plight and provide them with a better economic future.

With the election season around the corner, what are political parties doing to show people they have a serious plan to deal with the country’s economic challenges? So far, very little, if anything. Indeed, if news accounts are correct about a recent meeting of ruling coalition leaders in Dubai, their focus seemed to be more on who should be in the caretaker government and subsequent power-sharing arrangements between them than the economic problems facing the country. This suggests that the PDM parties still see governance as leveraging the spoils system rather than formulating public policy.

The real test, however, will come once elections are announced, because parties will then have to stake out their positions on economic as well as other issues. Voters will be able to determine whether in fact any party or leader has offered anything like an economic vision and has a strategy to extricate Pakistan from the economic mess it is in. But that doesn’t mean voicing the usual platitudes and clichés that figure so frequently in pronouncements by political leaders. There has been some talk about an ‘economic compact’ among parties, but this amounts to little more than a slogan as no one has cared to spell out what that should entail.

Only a fundamental break from the past can ensure a better economic future for Pakistan.

Some would argue that elections in the past have hardly been fought on policy issues and, instead, have been about personalities, traditional loyalties and local, constituency factors. This, of course, is true. But that view overlooks the fact that the ongoing economic crisis has affected people like never before and therefore public expectations may be very different from the past in the intensely fraught economic environment today. Not surprisingly, in successive public opinion surveys, people identify the economy as their number one concern. In a survey conducted by Ipsos in March, inflation and unemployment were the top public concerns. It would follow from this that many voters will look more closely at which political party can better handle the country’s economic troubles and ease their hardship. Voters are also likely to punish incumbents for their worsening economic plight.

Apart from what political parties may have to offer on economic policy, there is also the question of whether the nature of the election outcome will help or hinder efforts at serious economic reform. Present indications are that Pakistan’s era of coalition governments is not about to end. The pattern is likely to persist of a hung parliament with no party able to win an overall majority and form a government on its own. If the past is any guide, a coalition government will find it harder to secure consensus or agreement on tough economic measures, especially as the likely parties in such an arrangement (the two major parties in the present ruling coalition), are status quo parties in the first place, which have demonstrated little commitment to reform. Thus, coalition politics might inhibit the ability of the next government to take decisive actions and launch bold reforms. There are examples of coalition governments elsewhere in the developing world that managed to carry out far-reaching reforms, but it needed strong commitment by key parties to such action — a crucial element missing in our case, as none of the parties can be deemed as reformist.

There is also the strong likelihood of elections producing a regionalised outcome, with different parties forming governments in the four provinces. This reflects the reality of the country being bereft of a truly national party with roots and support in all provinces. Regionalised results in recent general elections also indicate the growing fragmentation of politics. As this trend is also likely to continue, it will magnify the challenge for the federal government to manage such a polity and, more importantly, build inter-provincial consensus on major issues of economic policy and reform.

Of course, before the country goes to the polls, there will be a period of some months when a caretaker government will be in charge. Its main task will be to supervise and preside over the election. But at a time when an ailing economy will need to be carefully managed and delicately handled, leadership on this count will be expected from the interim government. By prior agreement with the major parties, it can also take steps to strengthen and reinforce stabilisation measures to sustain the momentum of economic recovery.

There are many unknowns going forward. What is not in doubt is that the government that will emerge from elections, whatever its complexion, will have the responsibility to take the process of economic revival forward. Whether it can live up to that responsibility is an open question. But nothing less than a fundamental break from the past can ensure a better economic future for the country and its citizens.

The writer is a former ambassador to the US, UK and UN.

Published in Dawn, July 10th, 2023