Prime Minister Shehbaz Sharif’s sworn-in cabinet, comprising 19 members, faces the formidable task of governing Pakistan, a nation of 241 million grappling with significant economic, political, and security challenges. While the formation of a coalition government may resolve Pakistan’s political deadlock, its economic concerns persist, particularly regarding the appointment of the finance minister.
The Pakistan Muslim League-Nawaz party’s dilemma adds to the country’s financial woes, despite receiving a second tranche of over USD 700 million from the International Monetary Fund (IMF) in January as part of a USD 3 billion agreement.
Following the hung National Assembly resulting from the February 8 general election, Sharif’s government faces the urgent need to negotiate a new bailout deal with the IMF, as the current agreement expires this month. However, securing a new IMF program entails committing to stringent measures, limiting policy flexibility to address the populace’s frustrations and support struggling industries.
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Additionally, the new administration must confront a surge in militancy, particularly in Balochistan and Khyber Pakhtunkhwa, exacerbating tensions with neighboring Afghanistan. Pakistan’s calls for Afghan cooperation in curbing cross-border militant activities strain bilateral relations, despite Afghanistan’s denial of Pakistan’s accusations.
During Sharif’s previous government tenure, inflation soared to a staggering 38 percent, coupled with a significant depreciation of the rupee currency from April 2022 to August 2023. These challenges were primarily attributed to structural reforms mandated by the IMF program. Presently, Pakistan remains entrenched in an economic crisis, characterized by persistently high inflation rates, hovering around 30 percent, and sluggish economic growth of approximately 2 percent.
Prime Minister Sharif faces the daunting task of addressing Pakistan’s economic turmoil amidst ongoing political instability. The controversial national polls held on February 8 were marred by allegations of vote-rigging, vehemently denied by the country’s election regulator. Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party has spearheaded nationwide protests against the purported electoral irregularities and has pledged to persist with demonstrations until its electoral mandate is acknowledged.
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