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Political and Election Drama is Pushing Investors Away From Pakistan

Pakistan’s uncertain political theatre will keep on reflecting on the market, economy, and currency but once the truce is carved off the current political battles, the focus will be imminently back on the economy.

According to a report by Topline Securities, investors’ confidence which was already shattered amid fears of default on foreign loans, has been battered further by uncertainties hovering over the elections schedule. This leaves the million-dollar question hanging in balance whether the National Elections would be held in 2023.

According to polls conducted by Topline, 60-70 percent of respondents feel elections will be held before October or in October 2023 while 20-30 percent think it will be delayed.

The report says in any case, this uncertain political theatre would keep on reflecting on the market, economy, and currency. However, once the truce is carved off the current political battles, the focus will be imminently back on the economy.

Citing earlier reports titled ‘Pakistan’s Debt Restructuring’ dated December 03, 2023, and ‘Pakistan Debt Restructuring – Part 2’ dated January 24, 2023, the report points out that the crucial factor or the Achilles heel of the current debt is the short-term rollovers that have increased by 9 times to over US$ 12 billion since 2015. External debt restructuring is the litmus test, the mode of restructuring, and how orderly or disorderly is done, will determine Pakistan’s economic vulnerabilities.

The report urges Pakistan’s new government to convert its short-term external loans into long-term with the help of friendly countries like China, Saudi Arabia, UAE, etc. If that is not doable, then Pakistan should try the G-20 common framework of debt restructuring. These are less painful and will help in economic recovery.

On the political front, the report discussed efforts of dialogue between political parties to sort out the prevalent elections-related matter. This out-of-the-court settlement through dialogues can be a catalyst to cool political heat and lead to any decision regarding the elections for the national and provincial assemblies.

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