How would 2023 be for Pakistan

ISLAMABAD: A suicide bombing in the capital last Friday killed one police official and injured six people in the latest assault claimed by the Pakistani Taliban.

The banned Tehreek-i-Taliban Pakistan (TTP), which ended the truce with Islamabad last month, has launched a series of attacks in the country, a foreign media outlet said in its analysis.

Pakistani authorities have urged the Afghan Taliban, who seized power in Kabul last year, to use their influence on the TTP to make peace with Islamabad, but several rounds of negotiations have not yielded a positive result.

Pakistan faces multi-pronged security challenges, not only from the TTP, but also from the new rulers in Kabul, as shelling from Afghanistan along its border with Pakistan has killed several civilians.

The security situation may deteriorate in 2023 as the incumbent government has neither the popular mandate to tackle it nor the economic means to overcome the challenge.

On the economic front, Pakistan’s outlook seems dire as the year closes, with analysts fretting the country could end up like its regional neighbour Sri Lanka: unable to pay its debts, short on foreign reserves, and grappling with untenable, skyrocketing inflation. By November, its consumer price index sat at nearly 24 percent — after the State Bank of Pakistan unexpectedly raised interest rates to slow down inflation. Pakistan is scheduled to repay more than $26 billion in foreign debt in fiscal year 2023.

A climate catastrophe struck with the monsoon season, as heavy rains and glacial runoff combined to submerge large swathes of Pakistan’s south. The floods displaced millions of people and destroyed agricultural livelihoods, causing as much as $40 billion in damage that Pakistan cannot afford. In the weeks afterward, Pakistani leaders pleaded for international assistance and led developing countries at the annual United Nations climate change summit (known as COP27) in a call for “loss and damage” funding for those on the front lines of the climate crisis.

Pakistan has been grappling with a faltering economy for decades, but the Covid pandemic, and now the worsening global economic slowdown, have made it almost impossible to tackle the challenges facing the country. Massive floods, which many experts dubbed a “climate catastrophe,” also put additional pressure on the fragile economy.

In October, the inflation rate reached an all-time high of 14.9%. The Pakistani rupee is at its lowest against the US dollar, and petroleum prices are out of reach for common citizens.

According to Pakistan’s central bank, the country’s foreign exchange reserves have declined to $6.7 billion, the lowest figure in the past four years.

“Pakistan will continue to face a number of challenges in the coming year; a deepening economic crisis amid a rising political instability,” Niloufer Siddiqui, a political science professor at the State University of New York, told a foreign media outlet.

“In 2023, the government will focus on the usual short-term fixes that buy Pakistan more time but ultimately don’t end up solving the underlying problems, until the cycle plays out anew. So we can expect Islamabad to look for more bailout funds from the usual suspects — China and the Gulf countries,” Michael Kugelman, a South Asia expert at the Washington-based Woodrow Wilson International Center for Scholars, said. Husain Haqqani, a former Pakistani ambassador to the US and director of South and Central Asia at Hudson Institute, said Pakistan has not invested in human capital in the past seven decades. “It lives on textile exports and external borrowing instead of attracting diversified investments. It will probably avoid default through a mix of further borrowing and cutting imports but there is no sign of much-needed fundamental economic reforms,” he told the media outlet.

Instead of focusing on the economic crisis, the country’s politicians have been engaged in a bitter power struggle.

Pakistan has been politically unstable since former Prime Minister Imran Khan’s ouster from power in a no-confidence vote in April. Khan has launched a nationwide movement to overthrow the coalition government headed by PM Sharif.

Khan told media last month that the “only solution to the alarming economic crisis is to hold snap polls in the country.”

But will fresh polls and a new government end political crisis and revive the economy?

“Pakistan has faced challenges since its inception and is known as a ‘crisis state’ for a reason. Unless its civil and military leaders completely change course, and focus on governance, normal relations with neighbouring countries, and building an economy, it is unlikely 2023 will be drastically different from 2022,” said Haqqani. But analyst Kugelman is hopeful that Pakistan will fare better next year.

“Khan has eased his rhetoric and ended his long march, and a key element of uncertainty has been removed [former army chief Qamar Javed Bajwa]. Additionally, the flood waters have receded, though millions are still in need of assistance. Moving to 2023, the challenges I fear the most are security and economic,” he underlined. “The appointment of the new army chief means a key source of uncertainty has gone away. Now the big question is the election calendar. So long as the pressure tactics are not street protest-focused, the situation should remain manageable. But we can’t rule out an escalation by Khan,” Kugelman added. Haqqani believes that political polarisation is worse in Pakistan now than ever before. “If politicians cannot embrace reconciliation, their conflict will only attract further military intervention,” he underlined.