Shehbaz Sharif’s government faces daunting economic and political challenges in a polarised Pakistan

Pakistan’s new government has assumed power in a deeply divided country. The political polarisation in evidence today has few parallels in Pakistan’s recent history, with social media amplifying the divide and giving it an inflammatory edge.

In this politically charged environment in which an angry party is unreconciled to its loss of power, Pakistan Prime Minister Shehbaz Sharif has a sea of challenges to navigate before he can take the country to safer shores. Calling for unity, consensus and the need to heal the nation in his first parliamentary address as premier he struck the right note. But this may be easier said than done. His efforts to establish political and economic stability face imposing obstacles.

For a start, managing an unwieldy coalition of disparate parties, which will be rivals in the next election, will consume much of his time and energy. After all, the government’s parliamentary majority is precariously narrow. He hopes that sharing cabinet portfolios with coalition partners will give them a stake in the survival of the government. But it will also mean forging agreement among them on policy measures. Meeting their demands while taking timely decisions by consensus will involve a delicate balancing act for a prime minister serving at the federal level for the first time in his otherwise long political career.

Ailing economy

The coalition has an incentive to stick together in the face of the common challenge from a belligerent Imran Khan. Even so, they have differing views on key policy areas and will adopt positions with an eye on elections. For now, there is agreement that the government and assemblies should serve out the rest of their term of a year and a half until general elections are called. How politically feasible this turns out to be is open to question.

Sharif’s greatest challenge and top priority is to stabilise a deeply ailing economy. Pakistan’s chronic fiscal and balance of payments deficits are at a record high, foreign exchange reserves have depleted, the Pakistani rupee is under pressure, inflation has soared and debt has risen exponentially. The energy crisis is also set to worsen this summer.

A spokesman of the new government claims that financing needs next year are estimated to be around $30 billion while the current account deficit in the ongoing fiscal year is about $20 billion. Pakistan’s financing requirements this fiscal year are about $9 billion, $6 billion for the current account gap and $3 billion for debt repayments.

Some may deem these numbers as overestimates. But financing needs are large and urgent, and with reserves precariously low it is necessary to restart talks with the International Monetary Fund to continue the loan programme. Without a Fund programme, Pakistan will be unable to access financing from the World Bank, other multilateral agencies and even bilateral partners including China.

This confronts the government with tough choices. While resuming the International Monetary Fund programme is essential it will have to reckon with taking politically unpopular steps, especially at a time when inflation is hitting people hard and was the major factor for public discontent with the previous government.

The government’s dilemma could be mitigated to some extent if it is able to persuade the Fund to soften its conditionalities in the multiyear programme given that it will be a short-lived government with elections ahead. Even then, the government would have to manage the political fallout of measures it may still have to take.

Political challenge

The political challenge is no less daunting. Imran Khan is set on a course to mount maximum pressure on the government through confrontational politics and demonstrations of popular power. He has announced public rallies across the country which are likely to be big draws as that in Peshawar last week.

His aim is to force the Sharif government to call early elections. He is encouraged by the response he has received from supporters to believe elections would return him to power. He may be mistaken in assuming large crowds automatically translate into votes, but for now, he is determined to play a spoiler’s role and try to make the new government dysfunctional.

However, his decision for Pakistan Tehreek-e-Insaf lawmakers to tender mass resignations – to disrupt the political system – may hurt his party, which is why many opposed it. Not only does it leave the parliamentary field open to treasury benches to do as they will, but it may also weaken the prospects of their Members of the National Assembly in electoral contests that lie ahead. Nevertheless, the Sharif government will face a formidable foe in Khan and efforts to establish political stability will confront constant hurdles from Pakistan Tehreek-e-Insaf’s agitational activities.

Khan will continue to fuel the narrative of a foreign conspiracy that unseated him and seek to tap into anti-American sentiment. Despite the fact that the DG, Inter-Services Public Relations has clearly debunked the conspiracy claim, Khan’s allegation has traction among his loyal base and even beyond in a conspiracy theory-ridden society. It is therefore imperative for the government to counter this by unequivocally proving it to be false.

Sharif’s plan to call a meeting of the Parliamentary Committee on National Security to examine this, with service chiefs in attendance, is a step in the right direction. But it needs to happen sooner rather than later.

This will enable his government to press ahead more confidently to mend relations with the United States and the rest of the West. The priority in the relatively short life of the government, however, will be to fortify ties with Pakistan’s two strategic allies, China and Saudi Arabia. That should be easy as Sharif has worked with the Chinese on several projects in the past and the Sharifs have long-standing relations with the Saudi royal family.

The Prime Minister’s early meetings and statements have reinforced this priority as also the desire to strengthen ties with the United States, European Union and United Kingdom. But first-order issues are expected to all be domestic. Thus, major foreign policy initiatives, including with India, will likely wait until after the elections.

Critical tests lie ahead for the ruling coalition. It has to show it can stay together and govern, manage a troubled economy, dispel scepticism about “Purana” Pakistan and meet the expectations of the public who yearn for stability and effective governance.

This article first appeared in Dawn.