Overview

Maleeha Lodhi in her latest article, published in Dawn newspaper today, talks about bad governing conditions in Pakistan that Prime Minister of Pakistan – Shahbaz Sharif – needs to take bold and powerful decisions in order to run the country in right direction. The economy of a country always decided the fate of a nation. Similar is the case for Pakistan. The econimic crisis is rising day-by-day. So, the PM needs to take bold decisions related to economy which is neglected all the time and as a result economy of Pakistan is sinking, lastest news reported.

Description 

Financial Crisis

Since the two issues are intertwined, it is necessary to address both the pressing concern of avoiding a financial crisis and the more substantial one of preserving some kind of political stability concurrently. This difficulty must be overcome in the context of a home climate marked by strong polarisation and a global economic situation that is deteriorating. The coalition administration that is led by the PML-N has announced its aim to remain in power until the National Assembly has served its entire term, which will occur in August 2023. But that’s far simpler to say than it is to do. 

No Unity Seems in Government

The majority support for the so-called “unity” government is extremely slim. It is dependent on a diverse set of parties for its continued existence, all of which must be kept in check by continuously catering to their requirements. If the majority is so narrow that the votes of a few members can tip the scales, then Prime Minister Shehbaz Sharif will be forced to constantly look over his shoulder to check in with his supporters. This, in turn, could take his attention away from the duties of governing. It also makes it difficult to take strong economic measures and put them into practise because doing so will involve creating consensus among coalition partners, despite the partners’ pledges that they will support such action. And this comes at a time when Imran Khan is trying to ramp up the demand for early elections. If his demand for elections is not realised, he has already vowed to stage a “long march” to Islamabad and a sit-in demonstration there.

Dismissal of PM according to Article 63-A of the Constitution

In the meantime, the decision made by the Supreme Court about Article 63-A of the Constitution, which states that the votes of dissident lawmakers cannot be counted if they were cast in defiance of their party position, has thrown Punjab into even greater disarray. After that, the Election Commission came to the conclusion that the defecting legislators who had voted for Hamza Shehbaz as chief minister should be removed from their positions. Hamza’s government has been toppled as a direct result of this, and it’s possible that this may usher in a period of turmoil.

The PTI has already filed a petition with the Lahore High Court requesting that he be removed from office. Even though Hamza has stated that he will not stand down as chief minister, it is likely that new elections will be held. Both the PML-N and the PML-Q/PTI combination are currently engaged in a vicious battle for the position of chief minister. If neither political party is able to demonstrate a majority after two rounds of voting during a new election, then the provincial assembly will be dissolved and there will be a new election held. Even if the PML-N is successful in advancing to the second round of voting, the resulting administration will be extremely unstable. This has consequences for the stability of the federal government because it affects the largest province and political centre of the country, which are both in a state of uncertainty. Already, the state of paralysis that has gripped Punjab has lasted for nearly two months.

Economic Crisis is Adding Fuel to the Fire

The unstable nature of the economy is a factor that has a greater bearing on the situation. Almost all of the macroeconomic indicators point to a significant worsening of the economy, including a growing budget deficit, a record current account deficit, dwindling foreign exchange reserves, soaring double-digit inflation, mounting debt, growing losses in state-owned enterprises, heavy government borrowing from the central bank and commercial banks, a decline in investment, and a severely ailing energy sector that continues to stretch government resources and impose the burden of loadshed. In the meantime, the fuel subsidy that the former administration announced in its final days in office is costing the treasury more than $600 million each and every month.

The Country is Facing from Economic Crisis in terms of External Position

The economy is on the verge of collapse as a direct result of the precarious external position of the country and the problem in its balance of payments. The current account deficit for the fiscal year that is still underway has reached a new all-time high of $15 billion. The immediate finance needs that Pakistan has for this fiscal year are approximately $5 billion, including $3 billion to cover the current account shortfall and $2 billion for loan repayments that are due by June 30. To pay merely debt obligations throughout the following year, it is anticipated that financing needs will be close to $21 billion. The country’s foreign exchange reserves have fallen to just $10 billion, which is just enough to fund imports for another six weeks. Confidence has decreased in tandem with the depletion of the reserve cushion. This has resulted in further strain being placed on the balance of payments and has caused the rupee to plummet. Its value has plummeted to an all-time low when measured against the dollar, suffering a decline of roughly 20 percent in the span of just the past six months alone. The Indian currency broke through a psychological barrier the previous week when it began trading at 200 rupees to one dollar. This contributes a large amount to Pakistan’s existing debt.

During this time, discussions regarding the restart of the previously halted loan programme are being held in Doha between the government and the International Monetary Fund. It is imperative that the organisation be brought back to life in order for the nation to be able to gain access to the critically required money not only from the IMF but also from other multilateral organisations and bilateral donors. For instance, the finalisation of the Fund programme is necessary before the rollover of a Chinese loan can occur. So does Saudi financing. Before the programme may be restarted, the International Monetary Fund requires that the government eliminate the subsidies it provides for fuel and electricity. It has been claimed that Finance Minister Miftah Ismail has indicated to the Fund team “the government’s resolve to pursue changes planned under the programme and to accomplish the structural benchmarks.” These reports come as talks continue. It is anticipated that he will participate in the discussions taking place in Qatar this week in an effort to conclude the deal. It is incomprehensible that the negotiations for the bailout are being held in a third country.

Conclusion

If and when the agreement with the IMF is finalised, the government will be required to carry out the difficult economic measures it has pledged, assure compliance, and also manage the political fallout caused by these actions. In spite of the fact that the prime minister appears to have the backing of all of the coalition partners for this, sophisticated political maneuvering will be required in order to deal with the anticipated backlash from the public. Imran Khan will certainly be prepared to take advantage of this circumstance. Therefore, the political will to continue down the path of economic adjustment is going to be required. In order to successfully navigate the unprecedented economic and political obstacles, those in positions of authority will need to demonstrate courage, insight, and expertise. In that case, it would be the people of Pakistan who will be required to bear the consequences of ineffective policies.