Thursday, October 1, 2020
Home Opinions What no one is talking about - The real impact of Nawaz Sharif’s disqualification

What no one is talking about – The real impact of Nawaz Sharif’s disqualification

Also Read

Ravi Singh
Desi Technology Consultant and a voracious Reader
 

I was following the news on the disqualification of former Prime Minister of Pakistan, Nawaz Sharif by the Supreme Court on account of the infamous Panama Case. I was checking the reactions on social media. Most of the reactions seemed to only focus on politics. For a lot of people in the online Pakistani community, the concern was primarily the corruption charges and they cheered the decision of the SC.

While news & social media was busy, the markets started showing jitters. The KSE-100 tanked 3.6% in early trading after the verdict, but as initial news of Shehbaz Sharif taking over the helm from his brother percolated, the markets bounced back to their previous levels. KSE-100 had already seen a lot of volatility this year, partly due to the listing of Pakistani Stocks in MSCI Emerging Markets Index.

What no one was talking about in the media was about the long-term economic impact of political instability. The incident reiterated once again that, rather than the voters removing the Pakistani PM, judges, bureaucrats, the military establishment and even assassinations have done that job.

To say that the international credit rating agencies, IMF & MSCI (Morgan Stanley Capital International Index) are not watching this event closely is being too naïve.

Despite Pakistani stocks not getting the weightage that they wanted in MSCI-EM(Emerging Markets) Index (0.10% rather than the expected 0.19%), political stability, a clean handover of the Democratic reign from the PPP to PML-N and the ambitious plans/reforms promised by this government, was the primary factor that drove the inclusion. It was also the reason for IMF to be cautiously ‘optimistic’ about the country.

Pakistani economy, for now, is being propped up by a lot of debt. Whether it was the multiple bailouts from the IMF or Chinese state owned enterprises investing through CPEC (China-Pakistan Economic Corridor). Pakistani needs ‘at least’ 4-5% of consistent GDP growth for the next 2 decades to tide over any possibility of a mega-default.

I don’t have much opinion of political parties, ideologies or political struggle within Pakistan. But, if the possible future PM Mr Shehbaz Sharif or the current PM Shahid Khaqan Abbasi, face similar scrutiny due to the Panama Case or any other case and are weakened or worse removed before his term ends; there will be a backlash from international investors. There is a real possibility that rating agencies might downgrade Pakistani Government Bonds negatively impacting the ability of the State to raise funds to bridge fiscal deficits (Moody’s have already raised concerns). Too much debt is a toxic mix with political instability, which will put pressure on Pakistani currency leading to more depreciation. MSCI-EM might also reduce their exposure to Pakistani stocks in their kitty (especially Bank stocks).

Chinese investments is a whole different ball game, as there is no public data available on what rate of returns or sovereign guarantees the Pakistani government has promised to their Chinese counterparts. It’s difficult to comment that, but one can safely guess it will be on the higher side.

There is no political party in the National Assembly, which can stand up to the majority that PML-N holds. Holding another election, if it brings a hung National Assembly might trigger a market panic.

In short, there are no real good choices. The best strategy will be to take the least painful path. Pakistani political leaders will have to be careful; they have too much at stake to gamble.

  Support Us  

OpIndia is not rich like the mainstream media. Even a small contribution by you will help us keep running. Consider making a voluntary payment.

Trending now

Ravi Singh
Desi Technology Consultant and a voracious Reader

Latest News

Tejasvi Surya and ideological commitment

In his (still) short Parliamentary career, Tejasvi Surya has raised voice on various issues of both national and regional importance. This includes subjects ranging from- the use of Kannada language in banking to his views on broad Banking sector in recently completed session.

Courts are not always heroes and Legislatures are not always villains

Is the constitution a strait jacket? No, it leaves a plenty of room to change and it makes no attempt to regulate every aspect of human life.

Amnesty or travesty

Why they are afraid to disclose their funding? Why only 10% registered NGOs file their balance-sheets with Registrar of Societies? No NGO is ready to answer these questions except for playing victim card.

“माल है क्या?” देश में माल की कमी से जूझता ड्रगवुड, प्रधानमंत्री क्यों है खामोश

2014 से पहले मुझे बराबर मेरा माल मिलता था लेकिन जब से आपकी सरकार आई है तब से धीमे धीमे माल की कमी से मुझे जूझना पड़ रहा है। साल 2017 तो मेरे लिए इतना खराब रहा कि नशा पाने के लिए मात्र फोन से ही काम चलाना पड़ता है।

Reforms needed in Indian education system post-COVID-19

The present scenario has jeopardised the educational ecosystem to achieve its objectives. In this regard, multifront reforms are needed for the efficient functioning of the education system in the post-COVID-19 era.

Influence or ignorance?

Finding Bilkis Dadi in 100 influential people for 2020, I started my research on her and was astonished to see except for a convenient interview with Rana Ayyub, she literally has no idea what she is fighting for.

Recently Popular

Daredevil of Indian Army: Para SF Major Mohit Sharma’s who became Iftikaar Bhatt to kill terrorists

Such brave souls of Bharat Mata who knows every minute of their life may become the last minute.

पोषण अभियान: सही पोषण – देश रोशन

भारत सरकार द्वारा कुपोषण को दूर करने के लिए जीवनचक्र एप्रोच अपनाकर चरणबद्ध ढंग से पोषण अभियान चलाया जा रहा है, भारत...

New Education Policy- Winning the world with the Bharat centric Values

The NEP is an ambitious document, which is focused on the holistic and overall development of the students to make them Aatmnirbhar and to enable them to compete with the world while maintaining the Bharat centric values and culture.

सामाजिक भेदभाव: कारण और निवारण

भारत में व्याप्त सामाजिक असामानता केवल एक वर्ग विशेष के साथ जिसे कि दलित कहा जाता है के साथ ही व्यापक रूप से प्रभावी है परंतु आर्थिक असमानता को केवल दलितों में ही व्याप्त नहीं माना जा सकता।

You will be shocked to find who testified against Bhagat Singh in the landmark case ‘Union of India Vs Bhagat Singh’

The two men who witnessed against Bhagat Singh were Indians and their descendants enjoy a healthy social positions.
Advertisements