With Pakistan’s finances rapidly deteriorating and as the U.S. continues to put pressure over its alleged support for insurgent groups, Khan will be hoping for a smooth passage into office.
Imran Khan faces a crucial vote on Friday to secure Pakistan’s premiership after his Movement for Justice party pulled together a coalition majority since winning the most seats at last month’s national elections.
Khan will likely win the prime ministerial post after his choice for the lower house’s speaker was elected on Wednesday. However, the 65-year-old former cricket star may face a united opposition led by the previous incumbent Pakistan Muslim League-Nawaz and Pakistan Peoples Party – both of which now make up the second and third largest parties respectively and claimed rigging and military manipulation at the July 25 ballot. Khan pledged to investigate the charges and the army has consistently denied the allegations.
With Pakistan’s finances rapidly deteriorating and as the U.S. continues to pressure the nuclear-armed nation over its alleged support for insurgent groups, Khan will be hoping for a smooth passage into office. It would be only the second successful, consecutive transfer of power between civilian governments in a country that has been ruled directly by the military for almost half its 71-year existence.
After galvanizing voters, particularly Pakistan’s large young electorate, Khan’s Pakistan Tehreek-e-Insaf has made promises to both expand social spending, while attempting to fix the economy and rebuild the nation’s depleted finances. Despite forming a majority with the support of independents and several smaller parties, Khan’s ability to govern and push through reforms will continue to be tested.
‘Horse-Trading’
“Even within the PTI-led government, extensive horse-trading is likely needed to get policies passed,” Fitch Solutions said in a report last week. “We are skeptical regarding the new government’s ability to fulfill its campaign promises given its weak margin of victory and resource constraints.”
Khan’s party has already flagged that urgency is needed to deal with Pakistan’s dwindling reserves, which have dropped at the fastest pace in Asia this year to $10.4 billion. The nation’s current-account deficit has widened by 42 percent to $18 billion in the year through June.
Asad Umar, a senior PTI lawmaker and the incoming finance minister, said in an interview this month that Pakistan may need more than $12 billion to plug the finance gap and a decision on where to source funds needs to be made by September at the latest.
Many investors, analysts and politicians expect most or part of that will come from an International Monetary Fund bailout. With Pakistan a key country along its Belt and Road trade route, China has also been providing the South Asian nation with billions of dollars in stop-gap loans this year.
Those vast debts to Beijing have prompted worries from U.S. Secretary of State Mike Pompeo, who said last month he would be watching to see if Khan’s new government uses IMF funds to pay off the opaque Chinese loans. Umar said he would bring more transparency to the more than $60 billion Belt and Road infrastructure projects in Pakistan.
During his victory speech on July 26, Khan called for closer ties with China and said he wanted a more “mutually beneficial” relationship with Washington. His comment comes after President Donald Trump cut Pakistan’s military aid and a U.S. push saw the country added to a global anti-money laundering and terror financing agency in June. – Bloomberg