With political unrest, the economic activity in Pakistan is weakening further. Depressingly bleak outlook of the global economy compound worries of the country’s business class that desperately wishes for economic recovery and for the political chaos to end but not militarily.

In Pakistan, inflation is currently skyrocketing, the external sector is under grave stress, currency value is eroding, and recent floods and their fallouts drowned whatever was left of hope. The monetary tightening and curbs on imports posed new challenges for businesses.

The annual inflation rate hiked to 27.3 per cent from 9.5pc last year and 5.8pc in 2018 — the last election year. The net foreign exchange reserves with the State Bank of Pakistan stood at $7.9 billion on 4th November 2022, barely sufficient to finance 40 days of the import bill.

Hard currency is short in supply, and the Pakistani rupee was trading at Rs227.5 last Friday in the open market. It was Rs171 the same week a year back and 134 in the second week of November 2018.

‘The chance of consensus in the current environment is low so most of the hope is centred around handouts’

Prime Minister Shehbaz Sharif projected total losses from floods of over $30bn. To top it all, the lingering political unrest consumes the government’s attention leaving the public and businesses by themselves to face the music.

The business elite that detested democracy for the longest time in Pakistan shared their anxieties. But this time, they wanted political solutions within the confines of the constitution, all for the greater good of the country.

The economic meltdown and political uncertainty have hurt them, and they pulled out their usual laundry list of demands but did not spew venom for politicians the way they used to. Despite divergence on factors responsible for landing Pakistan where it finds itself today, not a single business leader suggested direct intervention to set things right and rid the country of ‘dirty-inept-politicians’.

Several top businessmen were approached to get a sense of thinking in their circles on the current dire situation and what they see ahead. Many were reluctant, some opened up only after being assured of keeping the conversation private, but few spoke on the record.

“The situation is disturbing, but there is no chance of a military takeover,” a pro-PML-N businessman who headed an apex body in the past said over the phone. “You can read whatever you like in the silence of usual pro-military suspects. Some people have desired it, but they also privately moan about military hegemony in certain business sectors,” he noted.

He expected an economic turnaround by April next year with the generous help of Saudi Arabia and China and expected foreign exchange reserves to touch the $24bn mark by April 2023.

Ehsan Malik, CEO of Pakistan Business Council, wrote back: “Only a consensus on key areas of reform between all the stakeholders can provide a sustainable solution to our economic woes. Pro-export policies, competitive exchange rates, improved market access, incentives to broaden the export basket, especially of services, self-reliance for key food items, and conservation of imported fuel can help restore balance on the external account.

“Restructuring and the privatisation of state-owned enterprises, reforms in the distribution of energy, broader tax base and a leaner civil service would address the fiscal imbalance. The chances of consensus in the current environment are low, so most of the hope is centred around handouts. We will manage somehow in the short run, but dark clouds remain on the long-term horizon.”

Muhammad Ali Tabba, CEO of Lucky Cement, was cautious. “I believe the economic situation to remain the same till January 2023, and we might see some improvement from February onward. Political uncertainty could drag economic recovery.”

A top gun saw the future shrouded in shadows. “Soaring food and energy prices and aggressive monetary tightening policies are triggering not just a cost of living crisis but making businesses unviable. If the situation is allowed to persist any longer, about 50pc of the industry will close.”

He saw slim chances of political reconciliation in the current polarised environment. He feared missteps by the government for political ends. He did not see the next caretaker government being in a position to take tough decisions to fix a bankrupt country.

The Overseas Investors Chamber of Commerce and Industry (OICCI) Secretary General Abdul Aleem’s response focused on stability for a business-friendly environment. “Currently, mixed signals are causing anxiety among our members and their respective headquarters that have invested over $20bn in the past 10 years.

“The government needs to be decisive. It has yet to allow price increases for pharmaceuticals and fill key positions like chairman, Intellectual Property Organisation and commissioners at the Securities and Exchange Commission. It has also delayed remittances of dividends and imposed foreign exchange charges. Some pharma companies, for example, have signalled to wrap up and leave if the situation persists.”

Irfan Iqbal, President Federation of Pakistan Chambers of Commerce and Industry, did not respond in time, but Faiz ul Haq, the body’s media person, hammered the value of policy continuity for business growth. “Consistent policies and stability are the lowest common denominator among all the stakeholders. Trade and industry had been hoping for certainty beyond the current transient one year till the next government assumes office after elections.”

The OICCI biannual report on Business Confidence Index is expected to be released later this month. The recent Gallup survey covering the third quarter of the current calendar year reports a pessimistic outlook in the business community, with 65pc of respondents reporting grave business stress. The survey reported net future confidence at 10pc, about half of what it was at the start of 2022.

Published in Dawn, The Business and Finance Weekly, November 14th, 2022