By Wajid Islam, Khyber Pakhtunkhwa Technical Education and Vocational Training Authority and Hafsa Hina, Pakistan Institute of Development Economics in Peshawar
After enduring the worst economic crisis of 2023, Pakistan’s next election should be focused on repair and reform. What’s happening is more like musical chairs.
Every citizen has heard it: “Pakistan is passing through critical times.”
For 77 years, the political elite has used this phrase and used it to convince the masses that the next round of elections will solve all the country’s problems. On February 8, Pakistan will go to the polls facing myriad problems and – once again – its people are being told about the country passing through critical times.
Pakistan has bitter relations with three of its neighbours. The eastern border with India has been closed since August 2019, with almost no trade and relations, and both sides blame each other for the destabilisation.
Similarly, the border with Pakistan’s north-western neighbour Afghanistan has been closed since January 13, 2024. Relations on the western border with Iran have also worsened: each side has conducted air strikes and accused the other of harbouring terrorists.
Pakistan is facing internal political instability and economic turmoil. Historic inflation, depleting foreign exchange reserves, increasing domestic and foreign debts, stagnant growth, rising unemployment and a drop in foreign direct investment and exports all add to the challenge.
But not much is likely to change with the upcoming election. Political analyst Zahid Hussain called the election a “mockery of the entire democratic process”, an unprecedented charade even under a dictatorship.
All opposition leaders are incarcerated and prohibited from running election campaigns. Even virtual events aren’t allowed, with authorities imposing internet outages during their events. Pakistan’s media faces censorship, barring any attempt to highlight or criticise the state.
And while some feel the backlash of state power, a previous antagonist can become a favourite and enjoy protections. This is Pakistan’s dilemma: one ex-prime minister is labelled a traitor while another is celebrated, and vice-versa. It’s an unending game of musical chairs performed for 77 years, at the expense of the population.
Yet Pakistan’s political elite has not learned from its repeated failures. The elections scheduled for February 8 have already been marred by allegations of pre-poll rigging from the caretaker government and the military. Both entities have denied doing so.
More than politics, the economy will be the barometer for Pakistan’s fortunes in 2024 and beyond. Pakistan endured the worst economic crisis of 2023 according to Human Rights Watch, with soaring inflation, poverty and unemployment. Skyrocketing inflation of 44.64 percent is crushing for a population already under economic strain.
According to the World Bank, the poverty level has risen manifold, and the growth rate is abysmal. Pakistan’s central bank has lifted interest rates to 22 percent, further choking business and economic growth. The country experienced a negative growth rate in 2023 and, if Pakistan avoids climate disaster and calamity, 2024 is projected to see growth of just 1.7 percent.
Pakistan faces stag-flation – low growth, high inflation and unemployment. No political party even has a substantive manifesto to address critical economic issues like a looming default and persistent deficits. The Pakistan Institute of Development Economics’ Reform Manifesto highlights the issues and offers suggested solutions.
Pakistan’s economy is on life support and is reliant on the International Monetary Fund (IMF) to keep a pulse. The country has availed 24 IMF programs with another on the way. Along with the IMF, Pakistan is leaning on deposits from allies to deplete foreign exchange reserves. Saudi Arabia has deposited USD$5 billion, China has granted USD$4 billion, and the UAE has rolled over its USD$2 billion.
Despite these deposits totalling USD$12 billion, the country’s official reserves sit under USD$8.027 billion, highlighting the economic turmoil. The country’s total external debt and liabilities have reached USD$128.80 billion. For the next three years, Pakistan has to repay more than USD$24 billion annually, accounting for more than USD$2 billion monthly. In 2024 alone, the country has to repay about USD$25-26 billion worth of external debt repayments and interest.
Pakistan’s post-election government will not be able to run the country smoothly while these problems persist. No messiah can fix all the country’s problems, as has been proven over and over.
Without a free and fair election that reflects the masses’ opinion, stringent reforms and a social contract built on rule of law, Pakistan will struggle to find stability, prosperity and positive change.
Wajid Islam is a Lecturer of Economics at Khyber Pakhtunkhwa Technical Education and Vocational Training Authority.
Dr Hafsa Hina is an Assistant Professor at Pakistan Institute of Development Economics.
Originally published under Creative Commons by 360info™.