MUMBAI: Imran Khan’s economic vision for Pakistan is alluring. The party backed by the country’s former cricket hero and likely new prime minister won the most votes in Wednesday’s election. Khan wants to fight corruption, reform government spending and improve the lives of the poor. Given the demands that are likely to come with any bailout of the $300 billion economy, that’s fanciful.
Khan’s ambitions echo those of Pakistan’s larger neighbours. Chinese President Xi Jinping has led an aggressive anti-corruption campaign and India’s Narendra Modi was elected with a similar pledge. Khan has a weaker mandate, needs to form a coalition, and has fewer financial resources at his disposal.
Indeed, Pakistan is heading for another financial crisis. The World Bank sees the economy growing at just 5 percent in the current fiscal year. Foreign exchange reserves cover barely two months of imports in a country that depends on foreign energy supplies. The central bank has raised interest rates by 175 basis points this year and the rupee has been devalued four times since December.
A plan to increase welfare spending more than four-fold is unlikely to be implemented if Pakistan seeks support from the International Monetary Fund. The country has tapped the fund more than 10 times in its history. Capital Economics reckons any support package will require the rupee to fall by another 10 percent by the end of the year, and interest rates to rise another 100 basis points. Rival potential saviour China is partly responsible for the country’s current predicament. The large infrastructure projects that form part of its Belt and Road programme have driven up Pakistan’s imports.
Pakistan’s likely new prime minister Imran Khan opened coalition talks with at least one smaller party and independent politicians on July 29, a spokesman said.
Khan’s Pakistan Tehreek-e-Insaf (PTI), or Pakistan Movement for Justice, won 16.9 million votes and 116 seats in the election held on July 25. That was short of the 137 required for a majority, but ahead of the party of jailed former premier Nawaz Sharif which secured only 12.9 million votes.
The PTI spokesman said Khan was expected to take the oath as prime minister around Aug. 14.
The country is drawing up plans to seek its largest ever bailout from the International Monetary Fund, the Financial Times reported on July 29, citing government advisers. The country was likely to need a loan of between $10 billion and $12 billion.
Sharif’s Pakistan Muslim League-Nawaz (PML-N) party has complained of vote-rigging, and alleged that the poll was skewed in favour of the former cricket hero.
In their preliminary findings, a European Union monitoring team said the overall electoral process, particularly the run-up to the election, was “not as good” as the 2013 poll. The United States voiced similar concerns.
Two newly formed small parties are seen as being open to an alliance with the PTI.
Pakistan’s KSE 100 Index has risen 3.5 percent since the polls closed. —AFP