Pakistan reckons with possible political void as experts say election timing uncertain

Pakistan is facing another period of political tension as questions swirl around a forthcoming election, supposedly in three months, that will end the caretaker government.

The elections, which experts tell The National are at risk of delay, will usher in a government that will have to chart a course for a country that has suffered 20 per cent annual inflation, worsening terrorist violence and devastating floods that killed nearly 2,000 and caused at least $15 billion worth of damage last year.

A motorcycle is refuelled in Peshawar, Pakistan, amid rising petrol prices. EPA

To pave the way for general elections, Pakistan has dissolved the National Assembly, after President Arif Alvi approved the dissolution request submitted by Prime Minister Shehbaz Sharif.

According to an official statement from the President's Office, Mr Alvi dissolved the National Assembly on the advice of the Prime Minister in accordance with Article 58-1 of the constitution.

The parliament's five-year term was set to expire on August 12, but it was dissolved three days earlier, giving the caretaker government 90 days to organise general elections.

If the assembly had been dissolved at the end of the government's term on August 12, the elections would have to be conducted within 60 days.

The dissolution of the assembly has caused mixed feelings in the country, 16 months after former prime minister Imran Khan was ousted in a no-confidence vote by a broad coalition of parties called the Pakistan Democratic Movement. Khan began serving a three-year prison sentence last week after being convicted in one of about 180 cases filed against him since his removal. He insists the cases are politically motivated.

Political stalling

Uzma Jadoon, who served with Khan’s Pakistan Tehreek-e-Insaf party in the departing National Assembly, told The National that delaying tactics were being used to stall the coming elections on the pretext of delimitation of constituencies based on a new census.

“If they were to conduct a census, why did they not do it at the start of their government?” she asked.

She said Mr Sharif's government started maligning Khan's image soon after the no-confidence vote.

“Often efforts are made to prolong the caretaker set-up, which should last for three months only and whose aim should only be to make arrangements for the elections," said Ms Jadoon.

“Whatever the Pakistan Democratic Movement allies do, I believe Imran’s party will win the elections.”

Moazzam Butt, a lawyer of the Supreme Court of Pakistan, told The National that, per the Article 126 of the Pakistan Constitution, a caretaker government can only last for three months and cannot pass any budget.

“Caretaker government works for three months only to pave the way for smooth elections. In the fourth month, the expenses of their government are compiled,” he said.

“But the ongoing debate shows that elections are likely to be delayed since the government has approved results of the fresh census, under which delineation of constituencies has to be done, which will take time.”

Election logistics

Muhammad Sajjad, a member of the National Assembly affiliated with the ruling Pakistan Muslim League-Nawaz (PML-N), said that elections are possible in November.

“If affairs are managed quickly by the Election Commission, the polls are possible within three months, too,” he added.

He also predicted that his party would win the coming elections.

“Some people think Imran’s sentence would create sympathy for him, which is wrong because the leaders of different political parties have faced jail in the past,” he said.

He added that Khan's party ruled his home province of Khyber Pakhtunkhwa for about a decade, but the only project they completed was the Peshawar BRT, an express bus route on a dedicated bus lane, “which is far more expensive than the BRTs in other parts of the country”.

Sohail Ahmed, spokesman for the Election Commission, said that when the new census is official, the body is bound to conduct a fresh delimitation of constituencies.

“The delimitation, once started, takes at least four months. It means the elections are likely to be delayed,” he added.

Daud Khan, who works in the private sector, said that people were fed up with the spiralling cost of goods and would welcome any party that promised to bring prices down.

“People may not understand the reason behind the hiking prices, but at least they would remember during the elections that the prices went high under the PML-N and its allies,” he said.

Khalid Hameed, who commutes to different districts for his job as a government employee, said that in the long term, the policies of PML-N were better than those of the PTI.

“The motorways are a project done by the PML-N and they are unique in Pakistan’s history,” he said.

Four reasons global stock markets are falling right now

There are many factors worrying investors right now and triggering a rush out of stock markets. Here are four of the biggest:

1. Rising US interest rates

The US Federal Reserve has increased interest rates three times this year in a bid to prevent its buoyant economy from overheating. They now stand at between 2 and 2.25 per cent and markets are pencilling in three more rises next year.

Kim Catechis, manager of the Legg Mason Martin Currie Global Emerging Markets Fund, says US inflation is rising and the Fed will continue to raise rates in 2019. “With inflationary pressures growing, an increasing number of corporates are guiding profitability expectations downwards for 2018 and 2019, citing the negative impact of rising costs.”

At the same time as rates are rising, central bankers in the US and Europe have been ending quantitative easing, bringing the era of cheap money to an end.

2. Stronger dollar

High US rates have driven up the value of the dollar and bond yields, and this is putting pressure on emerging market countries that took advantage of low interest rates to run up trillions in dollar-denominated debt. They have also suffered capital outflows as international investors have switched to the US, driving markets lower. Omar Negyal, portfolio manager of the JP Morgan Global Emerging Markets Income Trust, says this looks like a buying opportunity. “Despite short-term volatility we remain positive about long-term prospects and profitability for emerging markets.”

3. Global trade war

Ritu Vohora, investment director at fund manager M&G, says markets fear that US President Donald Trump’s spat with China will escalate into a full-blown global trade war, with both sides suffering. “The US economy is robust enough to absorb higher input costs now, but this may not be the case as tariffs escalate. However, with a host of factors hitting investor sentiment, this is becoming a stock picker’s market.”

4. Eurozone uncertainty

Europe faces two challenges right now in the shape of Brexit and the new populist government in eurozone member Italy.

Chris Beauchamp, chief market analyst at IG, which has offices in Dubai, says the stand-off between between Rome and Brussels threatens to become much more serious. "As with Brexit, neither side appears willing to step back from the edge, threatening more trouble down the line.”

The European economy may also be slowing, Mr Beauchamp warns. “A four-year low in eurozone manufacturing confidence highlights the fact that producers see a bumpy road ahead, with US-EU trade talks remaining a major question-mark for exporters.”