Contrary to what many political observers predicted, Pakistan’s general election on Feb. 8 delivered many surprises and ushered in an even higher level of political uncertainty than what already prevailed. According to the Election Commission of Pakistan, more 128 million registered voters were eligible to elect 266 legislators for the National Assembly and 749 for provincial seats. Of these more than 56.8 million eligible voters, roughly 45%, were between the ages of 18 and 35. According to the Free And Fair Election Network, despite the large numbers, early estimates indicate an election turnout of 47% — well below the 51.3% and 53.7% reported in 2018 and 2013, respectively.

Many expected a low voter turnout to yield the most probable outcome: a sizeable victory for the Pakistan Muslim League-Nawaz (PML-N), which would lead to the comfortable formation of a coalition and usher in PML-N supremo Nawaz Sharif into a historic fourth term in office as prime minister. The groundwork appeared to be in place, with many viewing the military as fostering Sharif’s re-ascension to power. Sharif’s return to Pakistan in October 2023 after four years of self-imposed exile in London and a swift dismissal of legal challenges, particularly the removal of a lifetime ban on holding public office, could not have come without military support, as former prime minister and leader of the Pakistan Tehreek-e-Insaf (PTI) party Imran Khan has vociferously alleged. The accusation has also been supported by the Pakistan People’s Party (PPP), with its leader Bilawal Bhutto Zardari labelling Sharif as the purported favorite to win in the lead up to the election. Although the PPP remains a key political rival of the PML-N, the two have in fact previously formed the Pakistan Democratic Movement (PDM) coalition, driven by a mutual desire to remove Khan from office — an effort that ultimately succeeded in ousting him from power in April 2022. In the weeks leading up to the elections, PTI candidates were detained and intimidated by the state, the party faced censorship and a social media ban on broadcasting speeches, and in January it was barred from using its iconic cricket bat symbol to identify its candidates on the ballot. The calculated move was seen as detrimental to the PTI’s interests in a country where roughly 40% of the populace is illiterate and relies on symbols to cast an informed vote. Days before the election, Khan was sentenced to a total of 31 years in prison in what was seen as a final blow to his political career.

However, election day had something else in store. With its election symbol snatched, the PTI-backed candidates were forced to contest as independents instead of members of the party but emerged as the largest bloc with 93 seats in the National Assembly, followed by the PML-N with 75 seats and the PPP with 54 seats. With no single party having secured the magic number of 134 contestable seats, a hung parliament prompted urgent efforts to form a coalition government. Having secured the highest number of seats as a single party, the PML-N moved to form a coalition with support from the PPP and other smaller parties. However, widespread allegations of poll irregularities and a telecommunication and internet ban that caused significant delays to the release of results have cast doubts over the credibility of the elections and will sustain concerns around the legitimacy of the coalition.

Additionally, past experiments do not bode well for both parties. The PDM was shaky. A PDM 2.0 is already set up for failure.

With the current formation of the new coalition government, an end to political volatility doesn’t seem to be in sight. The PPP has refused to join the federal cabinet but will support the PML-N to form a government at the center by contributing seats and agreed on former Prime Minister Shehbaz Sharif to lead the country instead of his brother, Nawaz. The role of chief minister of Punjab province, the country’s most populous province, is expected to be given to Nawaz Sharif’s daughter, Maryam Nawaz. Regardless of which member of the Sharif family is in the driver’s seat, Nawaz will clearly be calling the shots. In return, the PPP has secured the presidency and other coveted constitutional posts but by opting to maintain a distance from the government, it has already indicated it will serve as a hurdle to the government’s decision-making on an issue-by-issue basis. The PPP has played the long game and declared its unwillingness to take the fall for what will inevitably be a difficult tenure to complete — if it is completed at all. No prime minister in Pakistan’s history has ever completed his or her mandated five-year term.

Economic woes to continue

The current composition and tense dynamics indicate that the PML-N-led coalition will undoubtedly be a weak, minority government. The PML-N will be heavily reliant on the PPP for its survival and continuity in office, as well as for gaining buy-in for difficult and unpopular policies. Beyond securing political longevity, difficult economic decisions will have to be made, urgently.

Coupled with political disarray, Pakistan’s economic crisis will continue. According to the Pakistan Bureau of Statistics, the inflation rate stood at more than 29% in January. The highest inflation rate on record was 37.9% in May 2023. Pakistan also has to manage roughly $30 billion in annual external debt obligations, as its foreign currency reserves continue to fluctuate. As of Feb. 9, total liquid foreign reserves stood at $13.15 billion, having previously fallen to just $4.1 billion in June 2023. Even though Islamabad may rely heavily on its bilateral partnerships with Gulf countries to secure a routine rollover of bilateral debt (and is likely to see some success on this front), its vulnerable external position will sustain concerns about a potential default and make it challenging to secure multilateral financing. According to State Bank of Pakistan data, Pakistan requires $6.1 billion for debt servicing before the end of the fiscal year (June 30). Its current account deficit stands at $269 million, which could further exacerbate the projected deficit of $6 billion that the government expects, thereby complicating Islamabad’s ability to fulfil its debt obligations.

With the International Monetary Fund’s (IMF) Stand-By Agreement set to expire in April, the new government will have to prioritize securing a multi-year IMF financial support program. Pakistan is no stranger to the IMF’s Extended Fund Facility (EFF) but such support will come with even more stringent conditions and require sustained political commitment if it is to continue — a far cry from the PDM’s previous handling of the EFF, which was marked by short-sighted economic management policies spearheaded by the former Finance Minister Ishaq Dar that ultimately derailed IMF support. Extended negotiations or any failure to secure a long-term deal will in turn increase external liquidity stress and raise the probability of default. While Pakistan will continue to avert a sovereign default, its balance-of-payments crisis will periodically exacerbate an unstable economic environment and heighten investor hesitancy. The government will have to undertake unpopular economic decisions if it is to begin marginally stabilizing the economy. Much of this will require fiscal discipline, a withdrawal of energy subsidies, and initiating and implementing unpopular tax reforms.

Finally, remittances — Pakistan’s biggest source of foreign reserves at the moment — remain on a downward trajectory. Pakistan’s foreign workers in Saudi Arabia and the UAE are the biggest contributors to remittance inflows but political uncertainty and volatility over the past months has triggered hesitancy on the part of overseas Pakistanis. Economic projections for the election relied on ushering in stability, triggering a snowball effect that would prompt a revival of remittance patterns. However, this is highly unlikely to transpire given overseas Pakistanis’ concerns about continued economic fragility and what they perceive as a stolen mandate from those who won the election.

Balancing partnerships

Pakistan’s economic woes are not the only immediate challenge the incoming government will face. Balancing delicate bilateral partnerships and growing security concerns in the region will require an informed and smart foreign policy approach. Sustained tensions with its eastern neighbor, India, and an increasingly fraught relationship with the Taliban on the western border will keep Islamabad fairly occupied with managing its position in the region. Although it will continue to raise concerns about Indian actions in Kashmir in international fora, military adventurism will remain unlikely. The relationship with Kabul, however, is likely to grow more difficult, with an Afghan Taliban increasingly uninterested in minimizing the operational capabilities of militant groups posing a threat to Pakistan. The noticeable uptick in militancy in Pakistan’s tribal areas and Balochistan, which houses key strategic infrastructure projects, will keep the military and civilian government on high alert. Serious concerns about stabilizing the security landscape will continue to loom as the Pakistani state resorts to kinetic counter-terrorism responses and fails to adopt a cohesive, multi-pronged, and sustained policy to combat terrorism and extremism despite previous efforts to do so. Multiple threat actors across the country are increasingly active and while the military has demonstrated strong capability in responding to incidents and events, a long-term civil-military strategy is lacking. Furthermore, the recent aggravation in ties with Iran, though unlikely to prompt another military escalation, will nonetheless continue to cause occasional skirmishes along the border, thereby sustaining an elevated level of security risks for both sides.

Beyond the immediate neighborhood, Pakistan’s pivot toward its Gulf allies is likely to increase with a PML-N government in place and a military keen on strengthening bilateral ties. The civil-military approach toward Saudi Arabia and the UAE will remain unchanged regardless of any transition in political leadership. The Sharifs have a close relationship with Riyadh and the military’s endeavors to create special councils, such as the Special Investment Facilitation Council (SIFC), designed to foster greater investment from Gulf countries is reflective of Islamabad’s realization that even traditional allies have grown wary of simply and solely depositing funds in the State Bank. The coalition government will have to adopt a strong policy toward the Gulf to highlight Pakistan’s investment opportunities, of which mining and agriculture are already key sectors, in order to sustain a steady flow of foreign direct investment and maintain a distance from the specter of default. Islamabad’s economic reality will ensure that it remains reliant on its partners for financial assistance and avoids misadventures that could create bilateral tensions similar to those seen during Khan’s tenure. As regional crises continue in the Middle East, Pakistan will refrain from military involvement in the Israel-Gaza conflict but will offer diplomatic support to its allies. The country’s lack of engagement is less reflective of its diplomatic priorities and more indicative of its economic reality, which will prompt an inward approach toward financial stabilization over the coming years.

What will also remain unchanged is Islamabad’s pursuance of its “all-weather friendship” with China, even as Beijing continues to grow more frustrated with mounting security concerns around projects associated with the China-Pakistan Economic Corridor (CPEC) and the civil-military establishment’s ability to guarantee security. Ultimately, Beijing will be driven by its regional ambitions and desire to safeguard its investment portfolio, of which Pakistan is a key part. While China remains amenable to rolling over Pakistan’s loan repayments, it does hold roughly 30% of the country’s external debt. Since the initiation of CPEC in 2015 under Prime Minister Nawaz Sharif, any change in civilian leadership in Pakistan has not led to a disruption in bilateral ties with China. The coalition government is likely to stay the course; however, it will have to ensure that security guarantees are fulfilled to maintain a steady and uninterrupted flow of investment.

For all of the above, the coalition government will have to work as a unified body, the prospects of which remain unlikely. Political tensions already hindered a prompt formation of the government and its decision-making will face delays while political volatility continues. A fragile and weak coalition means that Khan simply cannot be discounted from the political arena, but what level of disruption he and the PTI can cause over a perceivably stolen mandate remains to be seen, all under the watchful eye of the military establishment.


Arsla Jawaid is an Associate Director at Control Risks, where she heads political and security risk analysis for Afghanistan and Pakistan.

Photo by AAMIR QURESHI/AFP via Getty Images

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