Pakistan remains completely cash strapped, pushing it to go cap in hand after loans and extensions in attempt to reduce pressure on external debt payments. Election campaigns are continuing quietly and voting day is not far away. Taking control of a country on the brink of bankruptcy is not a job for everyone but whoever takes the prize one thing is for certain – there should be no delay in getting to work. There really is no magic money tree so tax restructuring, inflation reigning and increased growth must all be the seeds planted. Only then can moves be made to improve growing insecurity and international relations. Pakistan has a long hard slog ahead of it.
Election. With the delayed election now scheduled to hold on 8th February, we expect that nothing will be free or fair about it. There is also a real chance that it may be pushed back again. In January, the Senate passed a non-binding resolution calling for a delay due to increased terror attacks and bad weather conditions. Pakistan’s military has always played a significant part in national politics. Nothing has changed and it continues to pull all the strings and it is not being subtle about it. Internet outages have disrupted social media and information access for many in the lead up to the vote. The government has blamed technical glitches for taking people off line but the timing seems rather convenient. On 20th January, Netblocks, an internet monitoring organization, confirmed that “a nation-scale disruption to social media platforms across Pakistan” coinciding with Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party’s scheduled launch of an online rally. On 7th January, service was also disrupted just as the PTI was holding a virtual fundraiser. Social media is the PTI’s last remaining information outlet. They receive no coverage in main stream media. We expect that a complete shutdown of the internet is highly likely right before polls open but even if it remains on, targeted disruptions will occur. The PTI has suffered another significant blow. The Supreme Court has banned it from using its electoral symbol – the cricket bat. In a nation where millions are illiterate, recognisable voting symbols are important. The court has ordered the party instead to use a bottle. As bottles are often associated with alcohol its existence on the ballot will not gather favour for the party from those who cannot read the names. Khan and one of his party deputies have been sentenced to 10 years in prison each, after finding them guilty of revealing official secrets. Khan and his wife have also been sentenced to an additional 14 years each for profiting from the sale of State gifts – charges denied strongly by all involved. Khan had expected his candidates to do well in the elections, winning enough seats to push through a parliamentary pardon and free him from jail. A recent Gallup Pakistan poll puts Khan’s approval rating higher than any other party leader but he, or his people, have to be in it to win it and if voters cannot find their favourite candidates, hopes of victory must surely be beginning to fade. The Human Rights Commission of Pakistan, in a statement, blasted the ‘blatant manipulation‘ of the election process noting that ‘one political party among others has been singled out for systematic dismemberment‘. In another statement posted last week, the HRCP also addressed the internet outages saying, ‘restricted or no access to the internet during the elections will infringe not only on people’s right to information but also their right to peaceful assembly.’ These are strong words but we can guarantee that no one in a uniform is listening to them. They just don’t care. We, however, do and we will stick our neck out and predict that the next Prime Minister will be Nawaz Sharif. He has, after all, held the office before and knows how powerful the military can be. He will play their game and situation normal will resume for at least the immediate future – assuming this time around he does the army’s bidding, of course.
Iran. On 16th January, Iran’s Islamic Revolutionary Guard Corps hit targets inside Pakistan with drones and missiles claiming they were being used by the Jaish al-Adl militant group. Pakistan immediately retaliated by launching attacks on several militant targets inside Iran. Pakistan briefly recalled its ambassador to Iran and suspended all bilateral engagements but normal relations have since resumed after China stepped in to mediate. Iran’s President Ebrahim Raisi is expected to visit Pakistan in coming months. Neither side really wants a fight with the other, and they are unified in their distaste for Baluchi militants on both sides of the border. China’s growing role underlines the political vacuum that now exists in the region. It is in China’s interest to make as much peace as it can to protect Chinese nationals and businesses operating in Pakistan. As it does so it will also gain more power – and that is something that the West is watching with interest.
India. Pakistan has accused India’s intelligence agency of planning and implementing the extrajudicial killings of two Pakistanis in Pakistan last year. Foreign Secretary Sajjad Qazi has said, “We have documentary, financial and forensic evidence of the involvement of the two Indian agents who masterminded these assassinations.” The allegation comes only months after the United States and Canada also accused India of assassination attempts on their soil. India has denied Pakistan’s claim calling it an “attempt at peddling false and malicious anti-India propaganda.” Pakistan and India have a long history of bitter relations and rivalry. That will not change any time soon, and igniting popular ire against India has long been a useful tool for misdirection and distraction.
The Central Bank has held its key rate at 22% for the fifth policy meeting in a row. Pakistan continues to grapple with an acute economic crisis. External accounts and foreign exchange reserves have improved slightly but more must be done. Inflation remains high but if current economic policy is maintained we expect that to start slowing down over the next few months. It has asked for USD2 billion in financial assistance from China who have agreed to extend a loan. The United Arab Emirates and Saudi Arabia have also issued bail-out funds. Pakistan now awaits a USD1.2 billion boost from the International Monetary Fund (IMF) but that will come with strings attached. The IMF want social programs for poor people to be implemented and wants to see targeted spending in the health and education sectors. Pakistan now sits in an incredibly risky position. It could go bankrupt in a heartbeat. National debt is about USD125 billion – one third of which is owed to China. Taking out more loans increases the financial pressure on the new government regardless of who wins the vote. Should the IMF, World Bank and countries like China suddenly start calling in their loans or stop providing assistance, it is game over for the country. As the election looms none of the parties are seriously addressing the economic issue. Instead they are campaigning on popular issues to gain support but ignoring what can only be described as the absolutely enormous elephant in the room.
Pakistan’s best hope now is a strong majority-led government capable of crafting a cohesive and clear plan of attack to combat hyper-inflation, encourage investment and increase exports. However, the possibility of a weaker coalition government gaining power comes with the possibility that opposing parties may struggle to unite and implement the much-needed economic reforms. It will also be harder to challenge military interference and manipulation. Economic growth dropped sharply to -0.2% in 2023, down from 6.1% in 2022. In turn, this translated into higher unemployment. Jobless numbers reached a record breaking high of 8.5% in 2023, beating the previous high of 6.2% seen in 2021. The Pakistani Rupee declined by around 24% against the US Dollar in 2023. The Central Bank has revised its average inflation forecast to 23%-25% for this fiscal year ending in June, up from the earlier expected 20%-22%.
Terrorism. At least five people were killed when a motorcycle bomb detonated near a police vehicle in the Ponda Bazar area of Dera Ismail Khan District in Khyber Pakhtunkhwa Province (KPP) on 3rd November. No group has claimed responsibility. On 26th November, a suicide bomber drove a vehicle into security forces at a market in Bannu, KPP. At least one person was killed and many more wounded. On 2nd December, unknown gunmen opened fire on a passenger bus traveling to Rawalpindi in Kashmir, eight people were confirmed dead at the scene. On 5th December a bomb exploded on the Warsak Road in Peshawar, KPP. The blast happened close to the Peshawar Public School. No fatalities were reported. The attack has not been claimed. On 12th December, militants attacked the Daraban Police Station in the Dera Ismail Khan District of KPP. The attack, which included a truck bomb and ground assault, killed 23 officers and wounded 36 more. Security personnel responded killing all six perpetrators. Tehrik-e-Jihad Pakistan (TJP) has claimed responsibility for the attack. Terrorists and various rebel groups in Pakistan killed around 1,000 people in 2023. Half of them were security personnel while the rest were civilians. We see no indication that these numbers will decrease in 2024.
Clashes. Violent clashes between Khan supporters and police have been recorded in several parts of the country. Insecurity, rallies, and associated disruptions will intensify as voting day nears. Numerous arrests have been made. Further clashes between police and activists should be anticipated and more protestors will be detained. Authorities will also use this as an excuse to shut down telecom services and access to social media sites and messaging platforms by claiming it will help prevent mass gatherings. Associated business disruptions should also be anticipated.
And just when we thought our expectations of the integrity of the democratic process in Pakistan couldn’t get any lower, the military says ‘hold my drink’. For almost eight decades we have seen nothing but consistent military interference in Pakistani politics but now they are making no attempt to even disguise their meddling. The new government must make 2024 a year for reform not only financially but morally and ethically. Despite being side-lined from participating in the election process, Imran Khan will continue to attract popular support and will stay a thorn in the side of all in political power. A comeback for him should not be ruled out. Pakistani politics can pivot in a second and Khan is poised always to take the maximum advantage of that. He is appealing his conviction – a case that will not be heard until after the vote. Should he be successful and have all charges against him dropped he will come out hitting hard at not only his opponents but also the military who instigated his incarceration. Khan has publicly faced off and criticised the military in the past. He will do the same, and so much more, in the future.
And just when we thought our expectations of the integrity of the democratic process in Pakistan couldn’t get any lower, the military says ‘hold my drink’. For almost eight decades we have seen nothing but consistent military interference in Pakistani politics but now they are making no attempt to even disguise their meddling. The new government must make 2024 a year for reform not only financially but morally and ethically. Despite being side-lined from participating in the election process, Imran Khan will continue to attract popular support and will stay a thorn in the side of all in political power. A comeback for him should not be ruled out. Pakistani politics can pivot in a second and Khan is poised always to take the maximum advantage of that. He is appealing his conviction – a case that will not be heard until after the vote. Should he be successful and have all charges against him dropped he will come out hitting hard at not only his opponents but also the military who instigated his incarceration. Khan has publicly faced off and criticised the military in the past. He will do the same, and so much more, in the future.