Pakistan’s polarised elections that followed nearly two years of unrelenting political turmoil and ongoing economic crisis have intensified uncertainty.

That the manipulated outcome of this election would have serious consequences for the future of Pakistan, its citizens, democracy and civil-military relationship is known to all; it would also have a bearing on the nation’s fragile economy.

The elections have been conducted after a delay of several months amid unsettling political and economic uncertainty and a tense security environment. Therefore, the massive exercise was expected to bring about some semblance of stability in the country. Far from it.

The widespread wins of independent candidates associated with the jailed Imran Khan’s PTI, especially from Punjab, have taken its rivals by surprise.

Many are concerned over the ability of a coalition setup to steer the economy and carry out difficult but necessary decisions

The angry PTI supporters came out in droves to poll their votes and register their protest amid an environment of fear and coercion in spite of the fact that their party leader was in jail and the candidates had been deprived of the common election symbol.

The PTI leadership claims that the election results had been changed to divest the party of its two-thirds majority in the parliament. Yet the independent winners linked to Imran Khan have emerged as the largest group in the lower house. No party, including Nawaz Sharif’s PML-N, which was backed and supported by the powers-that-be every step of the way, has gained a simple majority.

The unclear, fragmented mandate has had a negative impact on the markets as the nation’s dollar bonds, according to Bloomberg, fell, with the bond maturing in 2051 down the most in seven months. The benchmark KSE-100 stock index declined 3.68 per cent or more than 2,300 points, the most in two months, on Friday.

The official vote count was still underway, and the results from 15 constituencies were awaited on Saturday afternoon. However, Nawaz Sharif, whose party had won only 72 seats in a house of 266 members at the time these lines were being written, claimed victory in a speech on Friday night and declared the PML-N as the single largest party to have emerged in the national and Punjab assemblies.

In his victory address, which sounded more like a concession speech, the three-time prime minister invited all political parties to join the government and asked his party leaders to reach out to the other parties.

His brother Shehbaz Sharif has since met with PPP leaders Asif Zardari and Bilawal Bhutto, as well as politicians from other parties, to discuss the details and mechanism of the next PDM-like setup in Islamabad. The PPP has returned 53 lawmakers to the national assembly.

It’s anticipated that the powerful security establishment wants both the PML-N and PPP, as well as other smaller parties like MQM and JUI, to join the coalition government. Many are concerned over the ability of a coalition setup to steer the economy and implement tough reforms.

“We have seen the way the economy was mismanaged under the PDM. The previous Extended Fund Facility (EFF) loan agreement with the International Monetary Fund (IMF) that Miftah Ismail had renegotiated with months of hard work in July 2022 was derailed while the currency devalued sharply and inflation skyrocketed,” a financial analyst based in Karachi observed on the condition of anonymity.

“The deep political divisions mean our politicians might be able to produce a coalition lasting for the entire five-year term, pulling together the economy grappling with high inflation, growing unemployment, negative economic growth, and militant attacks.”

With the nation confronted with unprecedented macroeconomic challenges, political tensions and divisions, and resurging militancy, the analysts say the stakes for the new government would be enormously high. The most immediate task for the incoming government would be to negotiate a new, longer, and bigger bailout with the IMF as the ongoing nine-month programme ends in April to avoid a default on its international payments and stabilise the economy.

“Pakistan needs a wider political consensus to tackle the huge economic problems it has been contending with for the last two years,” a Lahore School of Economics professor said.

It was understandable when PML-N leader Nawaz Sharif maintained in his victory speech that his party could not steer the country out of its current morass alone, saying others would have to share the political burden of economic reforms. But the question is if a coalition emerging from tainted elections and lacking credibility can lead the country out of the ongoing economic crisis.

An Islamabad-based economist believes the country’s economic policy should be run by the army-backed Special Investment Facilitation Council rather than politicians. “There has been a growing feeling in the army leadership that the politicians are incapable of looking beyond their short-term political interests and, therefore, cannot handle the economy. Even though the prime minister heads the council, the decisions are made elsewhere with ministers managing day-to-day affairs,” he added.

The army establishment expects an investment of $100 billion in IT, agriculture, mining, and other sectors from the Gulf countries over the next several years. However, the promises are yet to materialise.

Economic experts believe the friendly Gulf nations are also waiting for a new government to take over the reins and strike a longer bailout deal with the IMF before making investment decisions in Pakistan. As Pakistan’s flagging economy contends with serious economic challenges, political instability will continue to haunt the efforts to reform and stabilise the economy.

Published in Dawn, The Business and Finance Weekly, February 12th, 2024