Pakistan is engulf with political chaos due to the arrest of former Prime Minister Imran Khan while hoping to extract a financial lifeline from the International Monitory Fund (IMF).1 The public demonstrations on the streets of major Pakistani cities could exacerbate Pakistan’s economic crisis.2 Economic growth has been stunted and the cost of living has risen.3 This was already a recipe for disaster in a country with over 220 million people.3 The Pakistani Rupee has been depreciating sharply and reserves of the country’s foreign reserves dwindling, the country has struggled to import essential products like food, leading stampedes at distribution centers.4 Fears Pakistan could default on its depth have lurked for months.5 Now as nationwide protests and violent clashes sweep Pakistan following Khan’s dramatic arrest on corruption charges, the country’s ability to secure much needed financial help has been cast further into doubt.6
“It makes things quite complicated,” said Sergi Lanau, director of emerging market strategy at Oxford Economics. “This is very bad news [in] a situation that was already very hard.” The government can probably muddle through in the immediate term, thanks to the forbearance of foreign creditors such as China, but the risk of default will rise unless an IMF deal can be reached soon.
Paramilitary troops smashed their way into a courthouse in Islamabad on Tuesday to detain Khan, who was ousted from power last year. His arrest — which the Supreme Court deemed unlawful on Thursday — has unleashed an outpouring of anger. Supporters have stormed buildings and clashed with security forces. At least eight people have died and hundreds have been injured, according to government officials. A spokesperson for the International Monetary Fund, which has been in talks with Pakistan’s government about restarting a $6.5 billion assistance program, said Thursday that negotiators are “heavily engaged” with authorities in Pakistan, which “faces a very challenging situation.” Yet investors are skeptical Pakistan and the IMF can reach an agreement to unlock much-needed funds, with the volatile political environment adding to uncertainty ahead of elections in the fall. (Pakistan’s political crisis will deepen its economic misery)
The country is on the brink of bankruptcy, and may go in to political turmoil. Turning to foreign countries for financial support like Authoritarian China could lead to further depth for the Pakistanis. China is already heavily burdened financially as it is. The arrest and then release of Imran Khan by the law enforcement authorities is going to exacerbate an already embarrassing situation. Pakistan is a nation with a rural based economy in which feudal landlords compete for control of the country’s future with budding industrialists in manufacturing and textiles.7
The army has also had its role to play in Pakistani politics but currently influences procedures from behind the scenes. However Imran Khan himself through the sheer weight of the charisma of his personality commands a great deal of support and is widely perceived by the rest of the populace as incorruptible. Corruption remains a huge problem in Pakistani politics. For that reason the gap between the rich and poor is ever widening. Pakistan’s biggest challenge as a developing nation is that it is divided by competing forces be they conservatives, or “socialists”. Khan represented a “third way forward” as prime minister. He represents a dynamic change that overturned the status quo. The traditional Pakistan Muslim League-N (conservatives); the Pakistani People’s Party (socialists), felt threaten by Khan and his Pakistan Movement for Justice (PTI) (Centrist) and wanted him gone.8 Now it is up to time itself to tell how this plays out.
Pakistan’s political crisis will deepen its economic misery
The political unrest that’s engulfed Pakistan since former Prime Minister Imran Khan was arrested earlier this week will complicate efforts…1 2 3 4 5 6
Pakistan is the 33rd-largest country in the world by area and the second-largest in South Asia, spanning 881,913 square kilometres (340,509 square miles). It … 7 8