Pakistani financial experts demand ‘strong’ economic team after polls to tackle crises

KARACHI: Leading economic experts on Thursday said they were wary of the possibility of a coalition government taking over the country post-elections, demanding a “strong” economic team to steer Pakistan out of turmoil.
The South Asian country of over 241 million people suffered from economic hardships throughout 2023, triggered by political instability, high inflation and interest rates, a weak currency and a precarious balance of payments crisis.
Frequent hikes in prices of fuel, energy, and power caused inflation to skyrocket and triggered protests in many parts of the country last year.
Haroon Sharif, an economist and a former chairman of Pakistan’s Board of Investment, agreed that a strong economic team would be required to steer the country out of the crisis and implement reforms.
“Overall, the new government will have to make economic revival policies rather than focusing on stabilization only,” Sharif told Arab News.
“Jobs, exports, power sector, and SOE reforms should take priority. A weak coalition government may not be able to steer these reforms.”
Former finance minister Miftah Ismail said the economic conditions last year depressed growth, triggering higher inflation and unemployment. He said it pushed around 95 million Pakistanis below the poverty line.
Ismail, who was replaced by former finance minister Ishaq Dar in September 2022, said the government’s inability to complete the International Monetary Fund’s (IMF) $7.5 billion bailout program increased Pakistan’s risk profile.
“When we came in April 2022 it was crucial for us to go to the IMF because of a high risk of default and we did and completed the review (seventh and eighth),” Ismail told Arab News.
He said the ninth review could not be completed due to his successor Dar’s policies, which included freezing the price of the US dollar.
“It was my intention that we would complete the IMF program review and would not restrict the dollar, and we would have completed the review in November 2022,” he said.
Pakistan secured a last-gasp $3 billion financing in June 2023 from the IMF which brought some stability to the country.
Ismail hoped for an economic turnaround for Pakistan after general elections are held on February 8, however, he was wary of the possibility of a coalition government getting elected to power.
“Majority of people expect that after election, a coalition government would be formed which are generally not stable,” he noted. “But we hope for the better and I think the economy has seen its worst time and it would see an improvement.”
Pakistan’s leading economic expert, Dr. Ikram ul-Haq, termed 2023 as one of the “worst economic years” in Pakistan’s history.
“The vast majority of Pakistanis suffered unprecedented hardships in 2023 due to skyrocketing inflation, rupee depreciation and reckless borrowing, and ruthless spending by the government,” Haq told Arab News. 
Dr. Haq said the government’s poor monetary, fiscal, and trade policies remained the root cause of the country’s economic downturn, adding that unabated political instability worsened Pakistan’s economic turmoil.
“Undoubtedly, it was one of the worst economic years in our history,” he said.
Ismail believed whoever formed the new government, Pakistan would have to opt for another IMF program once the short-term financing is completed.
Dr. Haq emphasized the need for political stability and for the next government to complete the current short-term financing program.
“In the wake of general elections, if political stability is not achieved, the economic situation can further deteriorate,” Haq noted, adding the toughest challenge for the new government would be to complete the short-term financing program and negotiate a new long-term one “with emphasis on fundamental structural reforms.”