It’s Unrealistic To Expect Lenders Not To Be Concerned About Pakistan’s Political Stability

Nobody wants to give billions of dollars to anyone who might default, which could happen to Pakistan in the very near future unless it gets its act together. Not only are systemic economic reforms required, no matter how hard they may be, but so too is political stability.

Pakistani Minister of State for Finance Dr Aisha Ghaus Pasha criticized the IMF’s mission chief in her country, Nathan Porter, for expressing concern about its political stability. He said that “We take note of the recent political developments, and while we do not comment on domestic politics, we do hope that a peaceful way forward is found in line with the Constitution and rule of law.” His statement came several days after Prime Minister Shehbaz Sharif spoke to Managing Director Kristalina Georgieva.

Those two discussed Pakistan’s requirements for receiving the rest of the IMF’s bailout package, which has been stalled for over half a year since last November. Porter’s comments prompted Pasha to accuse his global body of “Intervening in Pakistan’s internal affairs”, which she said is beyond its mandate. She also claimed that “Pakistan is running in accordance with the law” and that “a Plan B is always in place but our preference would be to go with the IMF programme.”

It's unrealistic to expect lenders not to be concerned about Pakistan’s political stability, however, since it could lead to circumstances that impede that country’s ability to pay back its loans. Nobody wants to give billions of dollars to anyone who might default, which could happen to Pakistan in the very near future unless it gets its act together. Not only are systemic economic reforms required, no matter how hard they may be, but so too is political stability.

At present, the post-modern coup regime has imposed an undeclared state of martial law that’s been in effect since former Prime Minister Imran Khan (IK) was illegally detained at the beginning of May. That development led to nationwide unrest, which included some mysterious individuals attacking military institutions. IK’s PTI claimed that they were government provocateurs while the state accuses them of being that party’s members.

Whatever the truth may be, that destruction was the pretext for the regime’s unprecedented crackdown against the opposition, which has seen the abduction of journalists like Imran Riaz Khan and allegations of female PTI workers being raped by police. Furthermore, leading PTI members have been pressured to defect in an attempt to break the party, while the Interior Minister who previously implied his intent to kill IK on at least two occasions threatened to try him and others in military courts for early May’s unrest.

The political situation in Pakistan is explosive since PTI is the country’s most popular movement by far, which is proven by it winning most of the by-elections that have been held since April 2022’s post-modern coup. The regime refuses to hold truly free and fair early elections like PTI demands since they know they’ll lose, hence why they’re trying to either break that party or possibly even ban it ahead of this fall’s planned elections in order to ensure that they remain in power, among other illegal means.

Lending money to any country in such tense domestic conditions is very risky, hence the IMF’s “hope that a peaceful way forward is found in line with the Constitution and rule of law.” If one isn’t, and there aren’t any reasons to expect the regime to reverse its refusal to hold truly free and fair early elections nor to release all the political prisoners that they’ve captured over the past month, then whatever money Pakistan might receive could ultimately be lost if the political crises worsens and it goes bankrupt.

The public isn’t privy to the IMF’s deliberations about whether or not to disburse the rest of Pakistan’s bailout package, but the point is that they and any other potential lender have credible reasons to be concerned about the recipient’s political stability. No responsible financial actor would ever extend several billions of dollars in loans to any country without considering this factor. The IMF therefore isn’t “intervening in Pakistan’s internal affairs” but is simply practicing a smart pecuniary policy.