With the International Monetary Fund’s (IMF) short-term $3 billion Stand-by Arrangement (SBA) loan programme in place and the default fears averted, it was widely hoped that the timely polls in the country would end political uncertainty in the country, putting the faltering economy on the trajectory of stability.

However, the new developments surrounding the dissolution of the National Assembly just days ahead of the end of its five-year term and the installation of a rather powerful interim setup have dashed much hope and created new political economy uncertainties.

Ideally, the dissolution of the assembly should have ended the uncertain political environment around the new elections, which must be conducted ‘within 90 days of the dissolution of the assembly as stipulated by Article 224 of the constitution’, and inspired confidence.

But the developments that took place in the last few days leading to the dissolution of the assembly and the decision to conduct new delimitations of the national and provincial constituencies have raised questions about timely elections and deepened political uncertainty in the country.

Installing a rather powerful interim setup has dashed hope and created new uncertainties that do not spell well for the economy

The poll delay has become all but certain after the Election Commission of Pakistan (ECP) gave a schedule to complete the process of fresh delimitations of national and provincial assembly constituencies by December 14, over a month beyond the constitutionally-mandated deadline for conducting the general elections in the country.

The announcement of the schedule for the delimitation exercise, the ECP argues, is necessitated by the approval of the new digital census results by the Council of Common Interests (CCI) on August 5.

The decision comes 10 days after the new, approved census results were notified and a week after the dissolution of the National Assembly. An anonymous ECP official was recently quoted in this paper as saying, “another challenge after delimitation would be synchronisation of electoral rolls with the new increased census blocks — an exercise which may take months to complete.”

In his maiden address to his cabinet, caretaker prime minister Anwaarul Haq Kakar said the people of the country paid taxes so that the government could deliver and provide a secure environment for them. “So that utmost duty — maybe it is for a month, two, three or whatever the allocated time is — we will demonstrate not through our words but through our actions.” It sounds like he is preparing his team for an indefinite stay in power.

The CCI approval of the census results came in the wake of repeated assurances by the previous PDM coalition government led by the PML-N that the new elections would be held on the basis of the 2017 census. What changed the coalition’s mind is unclear. But many political observers insist that the PML-N and the JUI-F do not favour early elections.

It is clear that the PML-N is not ready to go into election campaigns unless their ‘supreme leader’ Nawaz Sharif, who has been living in self-exile in London since the winter of 2019, returns home to lead the party.

The PML-N is also looking towards the country’s powerful security establishment to clear the political field for it in Punjab by ensuring the conviction of the jailed rival Imran Khan, who is still believed to be the most popular politician.

No wonder the party had convened the CCI meeting to hastily approve the 2023 census. Additionally, the PML-N also amended the law in its last days in power through the parliament that delegates unprecedented powers to the interim setup to take crucial economic decisions. Both these acts indicate that the PML-N isn’t ready to face people unless the field is cleared for it.

Although the PML-N is expecting the elections to be held no later than February next year, it remains totally unclear whether they will take place in that time period — or ever.

The potential poll delay following the ECP announcement has already triggered a strong reaction from the PPP, one of the major partners in the previous coalition administration. Their leaders have repeatedly warned against delaying polls beyond the constitutionally mandated timeframe of three months as such a development, in the words of Senator Raza Rabbani, would ‘put the federation under immense stress’.

A national body of lawyers’ has already moved the Supreme Court of Pakistan to examine the legal status of the CCI decision to approve the census results since the caretaker chief ministers of Punjab and Khyber Pakhtunkhwa did not have the mandate to participate in such major decisions that would affect the elections.

The Pakistan Bar Council has also announced to start a street movement in case the ECP delays the elections beyond the mandated 90 days. If that happens, the possibility of the PTI — and possibly some of the PML-N allies in the PDM — joining these protests cannot be ruled out, ensuing political chaos that could crush the economy.

Even though opinion is divided on the potential impact of anticipated delay in polls, most economic analysts believe that it would add more uncertainty to the fragile economy, already reeling under the serious balance of payments crisis.

“When we see uncertainty go up, we see that economic actors, including investors, stop making decisions,” said a political economist who requested anonymity because of his personal reasons. “This can have potentially devastating consequences for the economy.”

He predicted that the markets would become volatile and warned that “we may be in for another, longer period of economic chaos. The country needs a stable political environment and a government capable of taking tough decisions for the economy to recover and revive.”

He pointed out that no matter how well-meaning the prime minister may be, he doesn’t have the public mandate to take the tough decisions to turn around the economy.

An analyst at a securities company, Fahad Rauf, says there is no uncertainty about the future government since the PTI has already been put out of the picture.

“If the elections are delayed for a few months, it will not impact on the economy. Our establishment has a good relationship with the Gulf countries, and the IMF has approved its loan regardless of the fact that the provincial polls in Punjab and Khyber Pakhtunkhwa were not held within the mandated 90 days, and the constitutional provisions in this respect were breached.

“With no political baggage on its shoulders, the caretaker government is in a better position to implement the IMF programme. We are already watching the exchange rate depreciating in accordance with the market forces ever since the departure of Ishaq Dar. The caretakers didn’t drag their feet on petrol prices. So it doesn’t matter if the elections are delayed.”

Samir Ahmed, an Economic Advisory Group (EAG) member, argued that the economy could not be revived in an uncertain political environment. “There has to be some degree of political certainty. With the elections set to be delayed as of now, it doesn’t look like this is going to happen.”

He says the elections, if and when they happen, are unlikely to be fair in the given circumstances, and questions would remain on the legitimacy of the new government. “How can a government with questionable mandate carry out reforms? The way things are taking shape in the country doesn’t inspire confidence. I don’t see a ray of light,” he concludes.

Mr Ahmed is not sure if the caretakers are powerful to take tough economic measures that are needed to be taken. The army-backed Special Investment Facilitation Council is no answer to our problems, he adds. “At best, we will keep floundering along for another couple of years. But then what? The issues will remain there.”

Published in Dawn, The Business and Finance Weekly, August 21st, 2023