he forthcoming general elections in Pakistan appear very likely to be delayed, primarily due to the recent approval of the 2023 census results by the Council of Common Interests. This approval has created a duty for the Election Commission of Pakistan to undertake a fresh delimitation of constituencies, a time-consuming exercise. Also, the decision by the Pakistan Democratic Movement-led government to dissolve the National Assembly ‘prematurely’ has extended the window for holding elections from 60 to 90 days. Interior Minister Rana Sanaullah has said that these factors could push the elections to late February or early March. In essence, the combined effects of the census approval, the subsequent delimitation requirement and the extended election window from the timing of dissolution of the National Assembly have increased the likelihood of a delay.

Before delving into the economic implications of the election schedule, it is pertinent to understand why the PDM government has taken these measures to postpone the elections. Former prime minister Imran Khan, currently incarcerated following conviction in the Toshakhana case, and implicated in the May 9 vandalism of military installations by some of his supporters, finds his political future uncertain. It has been suggested that the PDM, facing significant inflation-driven unpopularity, might benefit from a delay in elections. Some in the PDM alliance might thus perceive the postponement as a window of opportunity allowing some of the socio-political dust to settle, banking on the PTI’s internal fragmentation and enabling the caretaker government to introduce challenging economic reforms.

On the other hand, a delay in holding general elections threatens to destabilise the already fragile economy. The political uncertainty could dissuade foreign direct investment, hindering long-term economic strategies and pushing the nation towards improvised short-term policies. A bigger current account deficit could cause further depreciation of the rupee, with potential hyperinflationary consequences. The duration of the electoral postponement could further magnify the economic strain, especially considering Pakistan’s engagements with global financial bodies like the International Monetary Fund.

While the recent amendment to Section 230 of the Elections Act of 2017 aims to provide the caretaker government with enhanced economic authority, its ambiguous wording – particularly the undefined term “existing” – leave room for diverse interpretations. Despite Law Minister Azam Nazir Tarar’s reassurances, these legislative changes, combined with a potential election delay, pose substantial risks for Pakistan’s economic trajectory.

It would be simplistic, however, to attribute all economic losses to a delay in the elections. A more realistic perspective would be that even if the elections proceed as scheduled and a new government takes office, economic challenges will persist. Quantifying the exact economic loss resulting from a delayed election requires rigorous counterfactual analysis. By comparing what would have happened in alternative, yet, plausible scenarios where elections were held on schedule, we can isolate and gauge the economic impacts specifically attributed to electoral delays.

Let’s assume that general elections are held on time and one of the two potential scenarios emerges. The first scenario is that the PDM coalition comes to power. In this scenario, the outgoing PDM forms a coalition government, introducing superficial stability. Yet, the inherent contradictions typical of coalition governments can lead to policy incoherence, unpredictability and potential paralysis. If the government continues to align with the establishment, its economic priorities might lean towards institutional interests rather than public welfare. Such a direction can perpetuate current economic adversity, notably stymieing foreign direct investments and further weakening the rupee amidst surging inflation. The other scenario hinges on a potential legal reprieve for Khan. Even if he resumes leadership and leads the party’s campaigning, fractures within the party might prevent it from gaining a parliamentary majority. Moreover, the 2023 landscape does not favour Khan’s earlier strategy (2018) of courting the “electables.” Without overwhelming support and given the mixed results in the past in his handling of the economy, Khan’s ability to catalyse significant economic improvement remains suspect.

In case of delay in elections, prolonged uncertainty can deter foreign investments; impede long-term economic policy formation; and might even push Pakistan towards hyper-inflation, especially if interactions with international entities like the IMF become convoluted. However, in case of elections taking place on time, under both scenarios, whether under a PDM coalition or a PTI-led government, seem to project continued economic challenges. The coalitions’ likely policy vacillation and PTI’s historic economic record suggest that neither route promises a rapid economic turnaround. Comparative analysis indicates that while delayed elections can indeed amplify economic strain, timely elections, given the probable post-election landscapes, don’t necessarily promise economic respite. The crux of the challenge lies deeper in Pakistan’s political-economic fabric rather than the timing of elections.

In assessing Pakistan’s economic challenges, it is evident that the issues run deeper than a few policy decisions or political outcomes. A core concern that consistently emerges is the ambiguity in some institutional roles that seem to go beyond the constitutionally defined boundaries. Pakistan’s multifaceted economic challenges have, in large part, been exacerbated by the failure of national institutions to stay within their constitutionally delineated spheres. When key institutions diverge from their primary mandates, it can muddy the waters, creating an environment of unpredictability which, in turn, affects both domestic initiatives and foreign partnerships. Recognising and addressing this underlying problem is the first step towards creating an environment conducive to robust economic growth and stability.

The caretaker Punjab government has already stirred controversy by agreeing to allocate vast tracts of land for a farming initiative. This exemplifies institutional overreach and a blurring of constitutional boundaries. Similarly, the Economic Revival Plan may look promising on paper but has already shown a worrying trend: a pronounced involvement in an economic council of non-elected leaders.

The writer is an associate professor in the Department of Economics at COMSATS University Islamabad, Lahore Campus