Imran Khan's travails continue as his ill-prepared team grapples with serious economic, political and social problems plaguing Pakistan
Imran Khan inherited an economy in crisis. Though it grew at 5.8 per cent during 2013-18, the fastest in 13 years and Gross Domestic Product (GDP) was forecast to rise by 6 per cent, Pakistan faces a vicious debt trap and the balance of payments situation remains precarious. Foreign reserves plunged to just over $8 billion in October 2018, down from $16.4 billion in May 2017. This will not be enough to cover imports and foreign debt repayments due by the year -end.
Pakistan has met its debt servicing requirements only by borrowing more. Its current account deficit widened by 43% to $18 billion in the fiscal year ending June 2018, while the fiscal deficit ballooned to 6.8% of the GDP. The country’s central bank devalued Pakistani Rupee four times since December 2017, weakening it by more than 20 %.
The Asian Development Bank has estimated that going forward, Pakistan’s working age population will increase by 27.5 million in 10 years. This would require growth at 7 per cent per annum and creation of at least 2 million jobs every year. The government just does not have the resources to meet this challenge.
Imran Khan’s economic management team, led by Finance minister Asad Omar, son of a former army General showed initial reluctance to go to the International Monetary Fund (IMF). Following the Prime Minister’s first overseas visit to Riyadh and Mecca for Umra, a high powered Saudi ministers’ team visited Islamabad to consider requests for loan-free oil supplies and investments for a proposed refinery at Gwadar. Adviser for Commerce, Abdul Razzak Dawood created a flutter by questioning the overwhelming dependence on Chinese loans under the ongoing China Pakistan Economic Corridor (CPEC) projects.
In a policy flip-flop, Imran Khan stated on October 17 that Pakistan may not approach the IMF for credit as some ‘friendly’ countries may help ward off the difficult balance of payments (BoP) situation. He went to Riyadh a second time in quick succession (Oct 23) for the Saudi investment conference. Saudi Arabia has reportedly agreed to provide $3 billion balance of payments support, as also a $3 billion three year deferred oil loan repayment facility. In November, Imran Khan travels to Beijing, his first trip to China since assuming office, in a similar quest for funds.
However, Asad Omar had met IMF chief, Christine Lagarde in Indonesia earlier, confirming that the country would go to the IMF for another inevitable bail out. It was also clarified thereafter, that CPEC loan details would be shared with the IMF. Their team is set to visit Islamabad next week (Nov 7).
Much will depend on the straitjacket that the IMF imposes on Pakistan. In the short term, it could demand a further devaluation of the rupee and increases in gas and electricity prices — which will add to inflationary pressure. The government’s financial administrators must realise a country that requires a bailout of roughly $10-15 billion is not going to be able to build infrastructure projects (read ‘dams’) through collecting charitable donations. For the PTI, the challenge will be to curb the party leadership’s penchant to blame political enemies because the Opposition’s cooperation will be needed, particularly in the Senate, if reforms are to be successfully pushed through.
Divided opposition - One-sided Accountability
Though both Pakistan Muslim League (Nawaz) and Pakistan Peoples Party PPP) won several seats in their respective bastions in Punjab and Sindh, they could not come together effectively to contest either the elections for the Speaker of the National Assembly (NA) or the President. A ‘Damocles sword’ of accountability for old corruption cases hangs against Asif Zardari and the Sharif brothers. Shahbaz Sharif was arrested just before the by-elections for the vacated seats in the NA and Provincial Assemblies. Despite the arrest, in the October by-elections, the PML (Nawaz) was able to wrest back two out of four NA seats vacated by PTI. Relations between the PTI government and the Opposition remain fractious and bitter, when perhaps a more sober and statesmanlike approach was the need of the hour.
Judiciary & NAB
The Supreme Court under Chief Justice Saqib Nisar has continued to exercise suo moto jurisdiction in executive domain, reversing naïve actions of frequent political interference in police transfers by PTI governments, both at the Centre and in Punjab. The National Accountability Court’s judgement in Nawaz Sharif’s case was set aside by the Islamabad High Court but the Supreme Judicial Council was prevailed upon to sack Justice Shaukat Siddiqui because he criticised the ISI. NAB Chief, Justice (retd) Javed Iqbal seemed ready to revive new cases against Asif Zardari and Shahbaz Sharif. Overall, the higher Judiciary has done anything to dispell the impression of remaining a hand-maiden of the military establishment.
The one silver lining has been smooth relations, so far, between the civilians and the Army leadership. The military wanted a civilian façade. The election outcome suits the Army Generals to a `T’, with their protégé, Imran Khan left just short of near majorities, both at the Centre and in Punjab, yet able to form governments, after horse-trading with Independents and turncoats. The honeymoon may last as long as Imran Khan does not take any independent foreign policy initiatives, especially pertaining to India, Afghanistan or the United States.
Before Imran could settle in, Gen Bajwa effected two major reshuffles of three star Generals, including bringing in a new DG, ISI on promotion. Lt. Gen Asim Munir Shah, earlier serving as DG, Military Intelligence was appointed to the prized post, albeit going through the motions of obtaining the PM’s concurrence. Asim Munir served under Bajwa as Force Commander, Northern Areas when the latter was X Corps Commander, Rawalpindi. Within the Army, he is regarded as a hardliner, also possibly in his religious leanings. The reshuffles indicated that once at the helm, Bajwa, like every other Chief of Army Staff in Pakistan before him, remains very much in command and is keeping his senior staff officers and top three star Generals happy by rotating them for important, aspired for assignments in the field (Corps Commands).
The international Financial Action Task Force (FATF) holds Pakistan in its ‘grey’ list — considered a jurisdiction with “strategic deficiencies,” joining Ethiopia, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen as countries where deficient anti-money laundering practices exist, failing to combat financing of terrorism. It was taken off the list in 2015, but was put back into the list after three years of observation. Admittedly, this placement came due to the US pressure given the recent dip in Pakistan-US ties.
Following the 3rd Mutual Evaluation Process of Pakistan, the Asia-Pacific Group (APG) of the FATF technical experts found that implementation remained a problem. It suggested that more actions should be taken to put an end to money laundering and terror financing, if Pakistan wanted to get off the list. Implications of the FATF grey list will not be easy to ignore. It will increase transaction costs for trade, and lending. More importantly, it will reflect adversely on the foreign investment outlook for the country. Ironically enough, letting Hafiz Saeed's Jamaat-ud-Dawa (JuD) and Falah-i-Insaniyat Foundation (FIF) off the hook could hasten Pakistan’s black-listing.
Mainstreaming of Islamic parties
Despite this pressure, the Army establishment remains committed to its plan of ‘mainstreaming’ radical Islamic militant groups which have attracted Western censure. Gen Bajwa and DG, ISI claimed, in their interaction with visiting US Secretary of State, Mike Pompeo that the mainstreaming of these outfits was a success and policies in this regard would be persisted with. The banning of JuD and its charitable front, FIF through an earlier ordinance was allowed to lapse.
The Barelvi surge
In the July provincial elections, the hardline Barelvi Sunni Muslim party, Tehrik-e-Labbaik Pakistan (TLP) won two provincial assembly seats in Sindh and one in Khyber Pakhtunkhwa. Crucially, it emerged as the third-placed party in a number of national constituencies across the country, regularly registering more than 10,000 votes, and going as high as 42,000 in some urban constituencies. The Barelvi resurgence is symptomatic of a larger trend of growing radicalism among the masses, not only in most of southern Punjab and Sindh (traditional Barelvi strongholds) but also in central and northern Punjab, where aggressive Deobandi radicalism is being contested by groups like TLP.
Blasphemy accused, Asia Bibi’s acquittal by the Supreme Court this week saw the TLP flex its muscles to set up road-blocks all over Pakistan, threatening to kill the Judges and inciting defence forces to revolt against its ‘non-Muslim’ leadership (Army Chief Bajwa is alleged to be a Qadiani). It remains to be seen now, if the Army will help pull Imran Khan’s chestnuts out of the fire. Otherwise, the PTI’s endorsement of ‘dharna tactics’ and appeasement of ‘the religious right’ may come back to haunt it during the rest of its tenure.
(The writer is ex-Special Secretary, RAW)