By Sankar Ray
In mid-December this year, foreign exchange reserves of the State Bank of Pakistan’s (SBP) dropped to $6.1 billion, the lowest level since April 2014, meaning that the SBP had reserves, just enough to meet five weeks of imports needed. The reserves of commercial banks declined by $14 million to $5.9 billion. For the coalition federal government of the Pakistan Democratic Movement with Mian Shehbaz Sharif of the Pakistan Muslim League (Nawaz) as the Prime Minister, the financial crisis is too severe to confront with confidence the political uncertainty in the New Year. To a great extent the situation was created by the main opposition party, Tehreek-i-Insaaf, headed by the erstwhile Prime Minister Imran Khan Niazi.
The foreign exchange reserves held by the SBP was $6.11 billion on December 22, 2022 against $10.8 billion in April 2022 when the PDM-led coalition took over the reins from the PTI-led government through the vote of no-confidence.
Pakistan’s total foreign reserves fell $570 million to $12 billion. Financial analysts suggest that the federal government has to ensure external inflows as quickly as possible to avoid a looming default on its external obligations, especially when Pakistan needs to keep the IMF loan programme on track. Farhad Rauf who heads the independent corporate establishment, Ismail Iqbal Securities (Private) Limited has warned the government of ‘dangerously low levels’ of forex reserves.
Pakistan has an outstanding debt servicing imperative of $8.3 billion and will have to get rollover of $2 billion from the UAE during the next three months of the current fiscal year. Besides that, another outstanding loan repayment of $700 million to Chinese banks which Pakistan expects to be refinanced. The principal amount of debt servicing stands at $5.035 billion in the next three months, while the interest repayment is around $426.88 million. Thus in all, the outstanding amount has gone up to $5.462 billion. In January 2023, Pakistan has to repay $600 million on account of commercial loans out of which $400 million will be paid back to a Dubai-based bank.
To date, Pakistan received $5.11 billion in bilateral, and multilateral loans and grants in the first five months of the current fiscal year. But the government could only muster up $200 million through commercial loans in the first five months out of the total budgeted amount of $7.47 billion. The government envisaged to fetch in $2 billion through international bonds for which no preparatory action has been taken up.
The PTI chairman keeps pressing for advancing the general elections feeling the pulse of the electorate in favour of the opposition. The party keeps the threat of resignation en masse of elected members of National Assembly and provincial legislatures. However Khan too feels that it might not be easy to force early elections. In a recent interview, he said, ‘I don’t see elections happening now. There is hearsay about a technocrat government being brought forward.’. But he had for the past months been demanding snap polls. This stance was intensified after his end of PTI’s party’s “Haqeeqi Azadi” in November-end. He even announced that Punjab and Khyber Pakhtunkhwa assemblies would be dissolved to put pressure on the Election Commission of Pakistan.
The pressure tactics to force early election is actually Imran Khan’s personal perception. It was not deliberated inside the PTI. Most of the PTI law- makers of both National and provincial assemblies have not yet processed their resignations. Furthermore, he seems somewhat hesitant about going ahead with his zeal for enforcing early polls. Which is why, referring to the disastrous experience of 1970i n the erstwhile East Pakistan (now Bangladesh), he has stupefied political analysts by resorting to an unseemly hurry saying “If political engineering is attempted in the next general election, then the results won’t be good.”
Political circles in the meantime were stunned by a revelation by senior journalist Hamid Mir that the miltablishment wanted Shehbaz Sharif as the PM in 2018. But the PML-N president “refused to betray” his brother and his party, Imran Khan was picked up by default.
According to Mir, there was a meeting between then Chief of Armed Forces General Qamar JavedBajwa, then the former DG ISI Lt Gen Naveed Mukhtar first. Thereafter, the then director-general of Inter-Services Intelligence Maj Gen Faiz Hameed was consulted. . Mir further alleged that Shehbaz Sharif was invited to this meeting and the army biggies tried to ensure Shehbaz that he would not have to take all his orders from his elder brother and party boss Nawaz. Shehbaz politely declined the ‘offer’.
The polity of Pakistan faces an ordeal, that too at a time when there is a twin uncertainty- political as well and economic .In other words, there is a simultaneity of financial crisis and political instability The PDM is a reflex of an “all versus Khan” dynamic, in a changing environment. The democratic process in Pakistan remains vulnerable and has experienced considerable instability since the country’s independence. ‘Corruption allegations, grievances, and political turmoil are common themes in Pakistani history, with the military as a recurrent stakeholder in politics”, quipped a Swedish academic who was in Islamabad, Lahore and Karachi for a study on the politico-social nebula that engulfs India’s troubled neighbor. (IPA Service)
