The political deadlock over the formation of Pakistan's new government ended on Tuesday midnight. After a week-long talks, former rivals PML-N and PPP agreed on a power-sharing deal to form a new coalition government, clearing the decks for the return of Shehbaz Sharif as the Prime Minister. Ironic, considering the mandate was clearly against the parties led by ex-premier Nawaz Sharif and Bilawal Bhutto Zardari.
In the press conference announcing the partnership, Sharif defended his decision to form the government, stating he had offered the independent candidates to form the government first as nobody had a clear mandate. "It would not be an easy ride. We will work together to bring this country on the path of development and progress," Sharif, the president of the PML-N, said.
Going by how disastrous his last tenure, Sharif would not have it easy the second term, considering the anger from the general public about the 'stolen mandate' and the back-breaking inflation.
Shehbaz Sharif's last tenure was characterised by mismanagement of the country’s economy which saw a sharp decline in growth. Foreign direct investment dropped to its lowest since 2009 and inflation hit a 48-year-high. The country's GDP dropped and unemployment soared, thanks to his austerity measures like raising taxes, cutting subsidies and reducing spending.
Pakistan teetered on the verge of defaulting on loans last year as rupee crashed. According to Salman Ghani, a political analyst who has been covering the PMLN for a long time, PML-N took the most hit during Shehbaz Sharif's last tenure. "The 16-month rule of PDM caused almost irreversible damage to the PMLN. The tenure saw massive inflation, hitting the public everywhere, including their own vote bank," Ghani told Al Jazeera. "Theirs is a party of development and the economy; people support them for delivery, not for ideology. That perception was destroyed in that time," he said, adding that the PML-N is now on the defensive.
Now that he has returned to power, thanks to the Army, Sharif will have multiple challenges to face. His ascent will be challenged by Imran Khan's PTI and even at international forums.
The next and the biggest challenge would be bringing some kind of stability to the country, both politically and economically. The immediate one is to negotiate a fresh agreement with the IMF. A $3 billion bail-out package negotiated with the IMF last June, which helped Pakistan avert a sovereign default, expires in April. The focus will be on the next Finance Minister.
"It is here at one of the most critical economic junctures that the Pakistan Muslim League-Nawaz (PML-N) faces a hard decision between appointing a highly experienced, former banker Ishaq Dar as the finance minister and bringing in a new face out of political compulsions," according to The Express Tribune newspaper.
The next challenge is to manage the country's ballooning external debt. As per the latest reports, Pakistan external debts have surged to $125 billion with at least $24 billion in loans to be repaid by November 2024. The country is likely to approach its traditional allies like China and UAE but aid is unlikely to come without bringing structural reforms of its own.
According to a report by Chatham House, such reforms are likely to involve the privatisation of loss-making enterprises and measures to raise Pakistan’s tax-to-GDP ratio. "However, any job losses resulting from privatisation are sure to fuel public anger with spiralling inflation at above 30 per cent, while any move to significantly widen the tax base will be met with stiff resistance from powerful interests within the agricultural, real estate and retail sectors," the report added.
Shehbaz Sharif will also have to sweat to manage the deteriorating security situation in the country, especially in the provinces of Khyber-Pakhtunkhwa and Baluchistan. Both regions have witnessed a sharp escalation in terrorist attacks in recent months mounted by factions of the Tehrik-i-Taliban Pakistan (TTP) and militant Baluch nationalists.
On what India can expect, though Nawaz Sharif has advocated for better relations with the country's neighbours, the coalition government is likely to make it impossible. Shanthie Mariet D'Souza, a Fulbright-Nehru visiting chair at Amherst College's School of Public Policy, told DW the Pakistani military will continue to call the shots.
"Irrespective of which party wins or coalition forms the government, civil-military relations in Pakistan are heavily tilted in favor of the military. There has never been a strong civilian government in Pakistan's history and that explains why the India-Pakistan peace process has never taken off in the true sense of the term," D'Souza added.
