Summer of uncertainty

Uncertainty has typically been associated with election years in Pakistan’s past. But this time, things look especially unpredictable in the run-up to the polls that may take place either in late July or early August.

On economy, it is unclear whether the PML-N led federal government can get a budget passed for the full fiscal year 2018-19. Arguing that only a new government has the right to present a budget, the PTI-led KP assembly may not present a budget at all. And the PPP-dominated Sindh assembly favours a four-month budget. Meanwhile, government’s finance team continues to insist that the budget will be presented on April 27. (Read more on this tussle: “When the sky falls, give a populist budget,” published April 16).

Also unclear is the fate of the hastily-announced amnesty scheme. It has been ten days since four presidential ordinances were issued to legalize the premier’s “radical economic reforms package”. So far, there is no clarity on institutional mechanisms to administer declaration of offshore/onshore assets, besides issuance of the five-year dollar bonds.

The clock is ticking, for the so-called amnesty window closes on June 30. Absence of judicial backing in some form or parliamentary legislation coming sometime soon, the scheme is likely to falter on account of potential amnesty beneficiaries lacking trust in the process. That would be a serious setback to government hopes of materializing some cheap dollar inflows to ease the external borrowing needs.

Already, Miftah Ismail, the finance advisor has started playing down expectations vis-à-vis offshore declarations. Instead, he is emphasizing “domestic amnesty,” which has a declaration levy of 5 percent on different assets. Meanwhile, there is no word on how and when the “real” real-estate reforms announced by the PM would be implemented. (Read more on those suggested measures: “Tax amnesty and the real estate,” published April 13).

The economic uncertainty is a function of political instability, which has risen to a crescendo. The hustle and bustle of the previous election year is visibly missing this time around. Folks seem fixated on the political erosion of the largest party, one that is currently ruling at center and Punjab. With the season of disqualifications apparently complete for Nawaz – and with his younger Sharif also standing in the dock – Punjab suddenly looks so much more competitive as an electoral space.

Still, with no other party likely dominating the Punjab scene either, it seems that 2018 would be the election of “independents” that have been cropping up here and there, keeping their options open. But still, it is strange that none of the major political parties have presented their election manifestos so far. Maybe, the activities will pick up after the announcement of caretakers, whose selection in itself is a challenging task for the government and the opposition in the current polarized environment.

In the foreign policy space, too, there is uncertainty over the fate of US-Pak relations. Rhetoric of early 2018 has cooled down, but the squeeze is still on. Losing Washington DC would be one thing; but losing other key Western capitals like London and Paris is probably worse. Such multilateral pressure was visible two months ago at the FATF, where even Beijing could not offer material support to its cornered ally. Meanwhile, government remains tight-lipped as the June FATF deadline for action plan approaches.