Farhan Bokhari
Pakistan’s unsettled politics and a lack of clarity on its economic future will continue to overshadow the country’s future in the year ahead.
Since parliamentary elections were held in February 2024, former Prime Minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party continues to dispute the results, claiming widespread rigging.
Consequently, Pakistan’s ruling structure led by Prime Minister Shehbaz Sharif and the opposition led by Khan have repeatedly clashed, from verbal disputes inside parliament to physical confrontations on the streets. In short, the sharp divisions within the country have continued to taint its outlook.
In the latest such encounter, just last month, thousands of Khan’s supporters descended upon Islamabad, Pakistan’s capital, before they were beaten back by security forces.
The number of people killed in that clash remains a matter of dispute. The PTI claimed at least 12 of its supporters were killed, while government-backed members of parliament claimed that none of the protesters died.
The latest unrest has cast uncertainty over Pakistan’s future prospects in more ways than one. Beyond political infighting, the unrest has undermined official claims that the economy is on a strong recovery path, coming over a year since Pakistan was surrounded by warnings of a coming default on foreign debt repayments, echoing the situation in Sri Lanka.
For the moment, Pakistan has returned to solvency after a $7 billion loan from the International Monetary Fund was finally secured in September this year (but only after Pakistan accepted tough conditions, such as scrapping seven special economic zones earlier set aside for granting tax concessions to new investors.) The zones were a centerpiece of the China-funded China-Pakistan Economic Corridor (CPEC), which was once publicized as the main focus of Chinese President Xi Jinping’s Belt and Road Initiative.
Pakistan Prime Minister Shehbaz Sharif meets with managing director of the International Monetary Fund (IMF), Kristalina Georgieva. © via REUTERSAdditional conditions require Pakistan to raise its tariffs for utilities, notably electricity and gas, while forcing more Pakistanis to become income tax payers. In a country where less than 2% of the population are registered as tax payers, Pakistan is widely considered to be among the world’s worst performers in this area.
These measures have come in a year when Pakistan’s annual economic growth of just below 3% is considered insignificant as it roughly equates to the country’s annual population growth rate. Changing the country’s future course requires Sharif to take unpopular steps such as forcing politically powerful landowners to become income tax payers, and departing from an amnesty from income tax payments for the agriculture sector.
The past year has also witnessed a surge in the number of terrorist attacks, prompting officials to claim that they were mostly led by Afghanistan-based militants who attacked targets in Pakistan and returned to the relative safety of sanctuaries just over the border.
For the moment, it is clear that tackling the biggest challenges, notably the militant attacks, urgently require a national consensus. Even the economic stability claimed by Pakistan as the country has returned from the prospect of a Sri Lanka-type default on debt payments, is yet to translate into long-term investments beyond an immediate rise in Pakistan’s stock market prices.
Going forward, the country’s leaders need to demonstrate progress in three vital areas to lift Pakistan’s future outlook.
First, there is an urgent need for political deadlock to end so that peace can return across the country. Pakistan can ill afford more clashes, as they will only cause future prospects to diminish. Different formulas have been publicly spelt out by political figures to bring calm, such as the creation of a national government joined by representatives of all political parties to end the ongoing rift. Yet, any new formula will only work if it brings an end to the prevailing political acrimony.
Second, Pakistan must embrace a new national economic formula that rests on the twin pillars of reforming the widely dysfunctional tax collection system and reviving economic growth. In the past year, Pakistan’s economic performance has been further dented due to the failure of agricultural growth as the outcome of failed government policies. The time for concessions to any sector of society, no matter how powerful, must end immediately. A new push for economic revival will not work unless the interests of individuals and communities with clout are set aside.
Finally, as the year draws to a close, Pakistan is facing unique challenges that highlight its struggles to keep pace with regional and global peers. A mid-December polio eradication campaign was accompanied by strong messages from government leaders emphasizing its importance and the need for success.
However, the harsh reality confronting Pakistan cannot be overlooked. Alongside Afghanistan, it remains one of only two countries still grappling with recurring cases of the deadly virus that primarily impacts children
Pakistan, a nation that proudly touts its status as the only Muslim-majority country with nuclear weapons, cannot afford to ignore the dire conditions faced by its population — particularly the nearly 40% living below the poverty line. These pressing challenges overshadow the ambitions of its leaders to elevate the country’s global standing.
source : asia.nikkei