Describing the challenges facing any prime minister in Pakistan as “difficult to resolve” has become a platitude, with the problems seemingly compounding with every successive government. This is especially true of Nawaz Sharif, who has returned to Pakistan after four years in self-imposed exile, seemingly with an aim to be elected prime minister for a fourth time. Unfortunately, we have no idea if he can actually hope to deliver on all his promises as he has yet to complete a full term in the Prime Minister’s Office.
When 2023 began, Pakistan appeared to be heading toward economic default, with a much-needed IMF bailout “suspended” over multiple violations to the agreement inked between Islamabad and the global lender. This, in turn, triggered a significant drop in the country’s foreign exchange reserves, as the country’s inflows failed to address expenditures, resulting in the imposition of stringent import restrictions to control dollar outflows. The dominos kept falling, with a major economic decline of import-dependent industries; a shortage of essential commodities; and rampant inflation.
The incoming prime minister will inherit an economy that is little better. While administrative measures have appreciated the rupee against the U.S. dollar and inflows have improved, foreign direct investment is practically nonexistent, and employment generation has come to a standstill, pushing millions into poverty. Islamabad is looking to its “friends”—especially Saudi Arabia and the U.A.E.—to facilitate an economic revival, but this would require significant reforms that would undoubtedly prove punishing to the general public. Can any political leader hope to retain their popularity in this situation?
With the end of 2023 approaching, Pakistan faces a tough road ahead. Economic experts are unanimous in expecting the country to proceed to another IMF program once the current one concludes, requiring much-needed, but unpopular reforms. The next prime minister, whosoever it might be, needs to have the mandate to take these difficult decisions while also avoiding the traditional premature ouster that has ensured no prime minister in Pakistan’s history has ever completed their five-year constitutional tenure. In the prevailing polarized political climate, this might prove a challenge that none of the country’s political leaders can effectively overcome.