The market, economy, and currency will continue to be impacted by Pakistan’s unstable political theatre, but if the current political conflicts come to an end, attention will return quickly to the economy.
According to a research by Topline Securities, the uncertainty surrounding the election schedule has further eroded investors’ trust, which was already shaken by worries about foreign loan default. The million-dollar question of whether the National Elections would take place in 2023 is now in doubt.
Topline polls show that 60–70% of respondents believe elections will take place before October or in October 2023, while 20–30% believe they will be postponed.
The market, economy, and currency would continue to be impacted by this unsure political spectacle, the research claims. However, as soon as the current political scuffles are put on hold, attention will return to the economy.
Citing earlier reports titled “Pakistan’s Debt Restructuring” dated December 3, 2023, and “Pakistan Debt Restructuring – Part 2” dated January 24, 2023, the report emphasises that the short-term rollovers, which have increased by 9 times to more than US$ 12 billion since 2015, are the key component or the current debt’s Achilles heel. Restructuring of external debt is the litmus test; whether it is done in an orderly or chaotic manner will define Pakistan’s economic vulnerabilities.
The report exhorts Pakistan’s new administration to work with friendly nations like China, Saudi Arabia, the United Arab Emirates, and others to transform its short-term foreign loans into long-term ones. If that proves to be impossible, Pakistan should try the G-20’s standard debt restructuring plan. These are less painful and will aid in the restoration of the economy.
On the political front, the report covered attempts at communication between political parties to resolve the ongoing election-related issue. This informal agreement reached through negotiations has the potential to defuse political tension and pave the way for a final decision on the timing of elections for the national and provincial assemblies.