The Election Commission of Pakistan (ECP) has finally announced the delayed elections on February 8 as the country’s moribund economy grapples with overlapping political and security crises.

The polls were supposed to have taken place within 90 days of parliament’s dissolution on August 9, but the ECP delayed the exercise on the pretext of redrawing constituency boundaries after the latest digital census.

The announcement of the election date came hours after an International Monetary Fund (IMF) mission started its two-week review of the nine-month, $3 billion Stand-by Arrangement bailout approved in July to help Pakistan avert an impending default. A report in The Express Tribune suggests that the election date has direct implications on the IMF programme review and also on any new deal with the Washington-based lender.

The poll is unlikely to be a free and fair exercise amid extreme political polarisation with the country’s main opposition party, Pakistan Tehreek-e-Insaf (PTI), and its leader and former Prime Minister Imran Khan having faced months of a nationwide crackdown.

Since May, the top PTI leadership has been facing widespread arrests. As we have seen previously, intimidation tactics force important PTI leaders to desert the party and switch allegiance. This strategy has borne fruit, with a number of resignations and defections.

Two new political parties, PTI Parliamentarian in Khyber Pakhtunkhwa and Istehkam Pakistan Party in Punjab, have also been carved out of the PTI. Many have gone underground to avoid arrest. Concerns have been raised about whether the caretaker government and the ECP are capable of holding fair elections.

Many politicians believe that the outcome of the new election has already been determined and that the PML-N will form the next government. Others expect it to emerge as the largest party in the National Assembly.

The economy needs some tough and unpopular decisions, which no government can take if it hasn’t come into power through a credible electoral process

In support of their argument, they point to the “seamless homecoming” last month of former Prime Minister Nawaz Sharif after four years of self-exile in London, which, they say, couldn’t have been possible without some sort of deal with the country’s powerful security establishment.

It is also alleged that the elections were delayed to ensure his return to lead his party’s campaign. The PPP, which was an important part of the alliance that ousted the PTI government through a vote of no-confidence in April last year and remained part of the PDM coalition set-up for 16 months, has consistently been voicing its doubts over the fairness of the upcoming national polls, demanding a “level playing field” for all players, barring those involved in the May 9 events.

Considering the current political conditions and apprehensions of major stakeholders like the PTI and the PPP, few see the next election as bringing political stability, upon which hinges economic stability, to the country.

With Islamabad having achieved or exceeded the economic targets for the first quarter of the ongoing fiscal year under the present short-term deal with the IMF, the caretaker government is on track to unlock the next $710 million tranche next month. The next programme review will take place in February, shortly after the elections in the country.

During the first quarter, the caretakers have demonstrated a “strong performance”. The deficit is down to 0.9 per cent of GDP compared to 1pc from a year ago on the back of significant cash surplu­s produced by Sindh and Balochistan, an increase in the petroleum development levy and large cuts in federal subsidies and development spending.

However, a report in this paper says Pun­jab overshot its expenditure by Rs28.6bn and Khyber Pakhtunkhwa by Rs10.31bn, which raised many an eyebrow, hinting at possible political manoeuvrings ahead of the elections. The Federal Board of Revenue also surpassed its revenue target of Rs1.98 trillion by collecting Rs2.04tr in the first quarter.

Moreover, unlike last fiscal year, no new supplementary grants were issued during the first quarter — meeting another important IMF condition. Gas prices have been increased sharply, and the petroleum levy has been enhanced to a maximum of Rs60 per litre on petrol as well as high-speed diesel to meet the IMF programme goals. The external account remains stable as the current account deficit flattens, mitigating pressure on the foreign exchange reserves.

The “external stability” achieved was supported by an army-sanctioned crackdown against smuggling and illegal dollar trade that helped improve the weakening exchange rate and cool down monthly headline inflation to less than 27pc last month from over 30pc the previous month.

While the recent economic gains are welcome, most economic analysts remain sceptical about the sustainability of these outcomes. Their scepticism stems from the fact that these outcomes are basically the result of short-term fixes like cuts in development spending, import curbs, increases in indirect taxation and levies on energy, administrative actions and the like.

The deeper structural and institutional weaknesses, such as a very narrow tax base, low industrial and agricultural productivity, low exports, etc, have again been left untouched.

Many fear that the party winning the elections lacking credibility would also not be able to focus and tackle the deep-seated structural economic issues. Much of their time and energy would be focused on establishing their legitimacy through short-term growth spurts rather than addressing long-standing economic challenges.

Pakistan’s flagging economy has been hit hard by political instability in the last couple of years. The situation is complicated by growing security concerns over the resurgence of terrorism in parts of the country. Unless the next government has a clear and credible mandate in fair and free polls, it will not be in a position to focus on and solve the economic problems of the country or tackle the security challenges.

The economy needs some tough and unpopular decisions, which no government, even if it has an absolute majority in the parliament, can take if it hasn’t come into power through a credible electoral process. The world understands this. The IMF gets this. We don’t.

Published in Dawn, The Business and Finance Weekly, November 6th, 2023