ISLAMABAD: An Islamabad-based think-tank on Wednesday warned that political instability in Pakistan significantly heightens the risk of unrest, underscoring the need for a national reconciliation to restore stability.

Islamabad Policy Institute (IPI) in its report titled ‘Mapping the Policy Agenda 2024 – 2029’ identified political instability as the foremost challenge facing the country and addressing this critical issue will ultimately pave the way for the much needed economic reforms and attracting foreign investment.

The think-tank stressed that the process should be all inclusive and more than just political maneuvering within the assemblies or the streets.

Faisal Ahmed, head of research at IPI, stated that such a process should recognise and address the concerns of all involved parties so that a common ground that facilitates constructive engagement and dialogue could be found.

Although various political stakeholders have recently suggested dialogue and reconciliation, divergent views on the process—particularly PTI’s insistence on negotiating directly with the military and the military’s refusal to engage in talks with the main opposition party—have stalled any progress.

In this backdrop, the report suggests that while the dialogue should be largely between the political parties, it should be owned and backed by the military. This it argued would legitimize the process, ensuring broader acceptance among the public and political entities, and foster trust among political factions, encouraging essential dialogue and compromise.

“The military, as a significant external stakeholder, has historically played a critical role in the country’s politics, and its position and reactions could significantly influence the feasibility and success of any reconciliation efforts,” it stressed.

For tackling the economic crisis, it was proposed that the government should push for a comprehensive debt restructuring plan that would relieve financial pressure and spare scarce resources for critical sectors.

“Without decisive action, the risk of following in the footsteps of countries that have suffered under the weight of unsustainable debt is all too real. Restructuring offers a viable alternative, one that requires courage, strategic foresight, and a steadfast commitment to the nation’s long-term economic health and sovereignty,” the report maintained.

The report proposed that institutions like the IMF should be engaged not just as alternatives to restructuring but as supportive partners in this endeavor.

The report further recommended reforming the subsidy programmes by eliminating regressive subsidies that benefit the affluent and focusing on targeted cash transfers for the vulnerable. Additionally, it suggested recalibration of government spending, strategic privatisations, and an expansion of the tax base.

On expansion of tax base, it advocated addressing the technical, political, and social dimensions of tax reform to tap into untapped sectors and bolster public trust in government spending, thus creating a more equitable and efficient tax system.

Petroleum sector expert Zeeshan Tayyeb recommended significant reforms for the petroleum sector, including its deregulation and a comprehensive overhaul of related policies. He emphasized addressing bureaucratic obstacles within key entities such as the Federal Board of Revenue (FBR), Ministry of Energy, State Bank, and the Oil and Gas Regulatory Authority. Tayyeb also highlighted the need to resolve issues concerning tax refunds, turnover tax, the margins of marketing companies, and foreign exchange losses.

Establishing a framework for investment, he maintained, will attract foreign direct investment and create a competitive environment.

Security analyst Abdul Basit, while discussing the security challenge in the report, recommended remapping of the current militant landscape, particularly in light of the Taliban’s takeover of Afghanistan.

He also called for addressing youth radicalisation, targeting the roles of gender in extremist groups, and the impacts of social media and misinformation; resolving the issue of missing persons in Balochistan through political efforts; and actively disrupting evolving alliances and sanctuaries of militant groups.

Published in Dawn, May 9th, 2024