What’s next for the new coalition government?

Pakistan’s economic plight

Pakistan has been in a state of economic turmoil in recent years.

Corruption, mismanagement, the COVID-19 pandemic, the global energy crisis and natural disasters have taken a heavy toll on the economy.

Many Pakistanis have seen their real wages fall drastically.

The country’s poor, in particular, are bearing the brunt of the rising cost of essential commodities, with many left unable to buy even basic food items and pay electricity bills.

Pakistan had signed an additional $3 billion agreement with the International Monetary Fund last year to deal with rising external debt and bridge the widening gap in the balance of payments.

Although the deal provided much-needed relief, the new administration will now have to engage in talks with the global lender on its extension, which will likely require Pakistan to agree to belt-tightening measures.

“This is a very difficult time in Pakistan’s economic history. The elected government will be forced to make unpopular choices to qualify for a new IMF loan,” economic analyst Farhan Bukhari told DW.

“And these decisions will carry the risk of public discontent in the near future. There will be no honeymoon period for the incoming government.”

But PML-N leader and former minister Ahsan Iqbal expressed confidence that the new government will fix the economy and bring stability.

The last 16 months of the previous coalition government are proof that we saved the country from default and brought the economy on a path of stability, he told DW.

Can the government deliver?

But not everyone is optimistic.

“This coalition will lack the political space to implement reforms, and it will take substantial austerity measures to meet IMF obligations for new loans,” said Michael Kugelman, South Asia director of the Wilson Center.