As the prime minister designate Shahbaz Sharif prepares to assume office in the upcoming National Assembly session this week, the business community of Pakistan is apprehensive about the potential challenges that lie ahead.

Their support for the idea of a national unity government, which includes the Sunni Ittehad Council adopted by the PTI-backed winning independents, did not resonate with the political leadership of three main victorious parties in the elections earlier this month.

Describing political manoeuvring as ‘dangerous games’, a senior business executive articulated his profound distrust of politicians, whom he deemed incapable of transcending their narrow self-interests.

He emphasised, “The economic challenges, mounting debt, twin deficits and public discontent demand that politician set aside their petty hostilities and forge a cross-party consensus on a minimum economic programme. This is crucial to revitalising investor confidence and fostering collaboration with development partners. Without a robust economic plan supported by all parties, achieving sustainable growth may remain elusive.”

Without a robust economic plan supported by all parties, achieving sustainable growth may remain elusive

Voicing his concern regarding the coalition partner, Pakistan People’s Party’s decision not to join the cabinet, Ehsan Malik, CEO, Pakistan Business Council, asserts that assuming their support for the fundamental economic reforms that Pakistan desperately needs would be imprudent.

Mr Malik underscores, “Implementing these reforms requires three to five years of dedicated effort, contingent upon a government that diligently undertakes them with broad cross-party support with a strong public mandate.”

Expressing his dismay over the past failures in this regard he poses crucial questions: “Will the inevitability of a new International Monetary Fund (IMF) programme to save the country from default spur consensus-building now, or will we squander precious time seeking handouts from the friendly countries?

“Can the Special Investment Facilitation Council (SIFC) persuade the incoming government to bring the untaxed and undertaxed segments into the tax net? Moreover, can it alleviate the parties’ reluctance to privatise or close the loss-making state-owned enterprises? Will the PTI/Sunni Ittehad leverage its popular mandate to exert pressure on the government?

“Can we expect the incoming government to complete its five-year term, allowing the IMF programme to run its course? Even if the IMF negotiations are led by a technocrat, will there be sufficient political will and resilience to implement structural reforms?

“In a tense political climate with popularity at stake, will the directives of a technocrat finance minister prevail? These are questions that the IMF will seek answers to, leaving businesses bracing for potential turbulence ahead.

“The risk lies in a series of short-term, reactive economic measures which do not augur well for any investment, especially foreign direct investment.” He acknowledged that the political environment was too polarised for the formation of a national unity government.

Badruddin Kakar, a prominent business leader from Balochistan, expressed his frustration with the quality of debate during the government formation process. He lamented, “Instead of addressing the pressing of the deteriorating economy and exploring options to salvage it, political leaders appear more focused on outmanoeuvring each other.

“This disregard for the core issues is disheartening and a serious betrayal of the mandate entrusted to the political parties by the people. The real issues we face are rampant inflation, escalating unemployment and diminishing business prospects. The future of the country and democracy hinges on the political leadership’s ability to effectively navigate these significant challenges.”

Dr Khurram Tariq, President of the Faisalabad Chamber of Commerce and Industry, highlighted the glaring absence of competent economic teams within the ranks of major political parties. He advised all parties to develop their teams of economic experts and try to evolve a minimum consensus economic plan.

Echoing this sentiment, another leader from Faisalabad expressed hopes that the incoming prime minister would expand his economic team to include forward-thinking individuals capable of steering the country out of its current impasse and towards prosperity.

M Abdul Aleem, Secretary General of the Overseas Investors Chamber of Commerce and Industry (OICCI), emphasised the importance for the new leadership of the country to look at the bigger picture and prioritise the broader national interests over party agendas.

He urged the formulation of policies that build upon recent initiatives by the caretaker government and the SIFC, aiming to expedite economic growth with the backing of investors and the business community.

Mr Aleem asserted, “There is mounting concern among the country’s creditors, as underscored by Fitch Ratings’ report on Pakistan, stressing the critical need to steer the economy in the right direction promptly.”

Expressing concern over the prolonged period of uncertainty since the dissolution of assemblies in 2022, Anjum Nisar, a prominent businessman from Karachi, emphasised the urgent need to address pressing issues such as debt management, energy costs, boosting exports, allocating human resources, improving education, implementing population control measures and reducing poverty. Mr Nisar aired scepticism regarding political stability, suggesting that progress would require collaboration among three major parties — PPP, PMLN and PTI — to resolve economic challenges.

Majyd Aziz, former president of the Karachi Chamber of Commerce and Industry, emphasised the critical role of political stability as a precursor to economic progress in Pakistan. Despite the announcement of a coalition government involving two national parties, Mr Aziz believed it would be prudent to continue efforts to make the party left out (PTI) to join in.

He argued, “Such inclusion, signalling a unified commitment to addressing economic challenges, would not only facilitate negotiations with the IMF but also send a positive message to friendly nations and investors.”

Published in Dawn, The Business and Finance Weekly, February 26th, 2024