The Pulse

How Pakistan’s Struggling Economy Creates Opportunities for Imran Khan

Imran Khan may have an opportunity that wasn’t available to his predecessor.

How Pakistan’s Struggling Economy Creates Opportunities for Imran Khan
Credit: Pakistan PMO via Facebook

In Pakistan, the challenge of stabilizing domestic economic growth has brought the country’s major institutions on together temporarily. For now, the country’s struggling economy has put domestic institutional feuds on hold. The situation has placed the ruling Pakistan Tehreek-e-Insaaf party in a position where it faces no significant threats in terms of the government being isolated or destabilized due to the intentional policies of any state institution.

One can argue that the state has put its weight behind Prime Minister Imran Khan due to the overall worsening economic conditions. Pakistan’s foreign reserves have fallen to a level that it can only afford import bills up to around two to three months from now. This situation remains even after the insertion of recent funds from states such as China, the United Arab Emirates, and Saudi Arabia.

The massive devaluation of Pakistan’s currency against the dollar and sinking exports have piled up billions of dollars in foreign debt that the country has to pay every year. Pakistan’s hopes of engaging Chinese investments to salvage the country’s economy doesn’t appear to be helping it in the short term either. Moreover, the United States’ decision to completely cut Pakistan’s security and economic aid has only added to the growing financial burden. Besides, with Pakistan’s so-called mortal enemy, India, purchasing billions of dollars’ worth of military equipment, Islamabad is seriously concerned. The understanding among key state institutions is very simple: you cannot successfully execute your defense plans unless you have ample financial means at your disposal.

This growing understanding goes hand in hand with the elected civilian government’s reformation plans. While Imran Khan’s government has a major reform agenda, the existing financial constrains appear to be hampering what the party promised to its voter base. The current government, after coming to power about six months ago, has been on toes in terms of arranging funds to keep the country’s economy afloat. There are hardly any funds available to make the next one or two years’ reform plans that involve any sort of major financial commitments. During the past five months, Pakistan has entered into major investment deals with Arab states in the Gulf region. On multiple levels, efforts are underway to diversify the China-Pakistan Economic Corridor (CPEC) in terms of attracting funds from countries other than China. While China may be ready to come to Pakistan’s help in terms of acute financial crisis, neither Beijing nor Islamabad prefers an economic partnership where Pakistan doesn’t have support from any other states.

The entire situation has not only brought together the country’s civilian and the military leadership, but it has also given major state institutions a lot to think about concerning Pakistan’s existing economic, political and security priorities. Pakistan’s powerful military seems ready to support the elected government in its plans to revive the country’s domestic economic base. This offers Khan’s government a valued partner whose support can make a difference when it comes to any domestic political challenge. In this context, any domestic governance slip-ups is likely to be overlooked as long as Khan continues to make headway in terms of bringing investments to Pakistan.

The looming economic crisis may actually very well end up reversing Pakistan’s political and economic priorities at the state level. Already, there have been a number of initiatives that appear to have become a possibility due to the ongoing economic meltdown in the country. Pakistan’s top leadership is not only interested in normalizing ties with India, but also wants to open trade contacts. The signaling in this regard is not just coming from Pakistan’s civilian quarters but also from the military as well. Moreover, there is a persistent focus on not allowing terrorism to rear its ugly head again as the country looks to not only attract tourism but also recover its soft image at the international level. In this context, it only makes sense that the country’s major state institutions prefer a civilian regime that does not face any major political challenges domestically.

An elected government in Pakistan has never been able to perform to its full potential without the support of the country’s national security establishment. With the elected government in sync with the national security institutions concerning economic and security concerns, Khan’s government has a rare opportunity to execute its domestic governance plans without any plausible political resistance.