Political stability and economic prosperity are intertwined, as evidenced by Pakistan’s political economy, where economic downturns are the outcomes of political turbulence. Pakistan is facing plethora of problems with economic crisis, rising unemployment and political unrest, topping the list. These challenges are exacerbated with myopic policies of previous Governments. In June 2024, Pakistan was on the brink of default, with its foreign reserves falling to paltry US $4.4 billion, barely enough to pay for a month’s imports. The currency got dropped by more than 50% against the US dollar. Then-Prime Minister Shehbaz Sharif obtained an essential IMF bailout package, before completing his tenure. This Standby Arrangement (SBA) required stringent actions line eliminating the subsidies on basic commodities and tagging value of the rupee with the open market. The trickle-down effect was obviously severe for the commoners. The caretaker political set up that got into office in August 2023, confronted the challenge of fulfilling the requirement of US $3 billion IMF package.
The world is eagerly waiting for the announcement of economic policies of the new Government that is about to be functional in a time frame when current IMF package is likely end (i.e. March 2024). Pakistan is experiencing a serious debt payment issue, with external debt commitments worth US $24 billion, due for payment by June 2024. Instead of relying exclusively on the IMF, the incoming Government must take proactive actions to maximize the country’s economic potential. Volatility of Pakistan’s stock market is also a reality, which remains contingent upon the economic stability. Foreign and domestic investors are apprehensive of uncertain economic policies of the Government and contradictory fiscal decisions. This uncertainty causes a loss of trust in the Pakistani economy, resulting in the capital flight besides limiting the foreign direct investment. This is the time to stay united and work to improve economy. Ironically, certain political quarters are still pursuing their heinous agenda with claim to derail next IMF package for Pakistan. such forces are not working in sync with national interest and thus merit condemnation.
There exists a need to use the China-Pakistan Economic Corridor (CPEC) project for stimulating the economy, increasing the global trust and attracting foreign direct investment. The CPEC, often known as the BRI’s ‘flagship’ initiative, is considered to be China’s most important geopolitical and economic project, outside of Chinese borders. CPEC has a broad scope including the development of Gwadar Port, as an international standard deep-sea port, power generation projects utilizing a variety of resources, construction of motorways, highways, railway networks, digital connectivity via fiber-optic cables, and establishment of Special Economic Zones (SEZs) for promoting industrialization. Again with ex-premier Imran Khan’s victory in 2018, there were calls to investigate and renegotiate the CPEC. That political point scoring resulted in loss of pace and impetus to the project. However, efforts to revive the economy got restarted after, PTI’s regime was overthrown in 2022, through a vote of no confidence. The Chinese authorities have confirmed their intentions to work with the incoming Government on CPEC.
It is now up to the incoming Government to prioritize efforts for the revival of economy and induce re-invigorated momentum on signature projects of CPEC. A fair and competitive environment should to be created for attracting private sector investment, increase productivity, and promote innovation and growth. Job creation, particularly for young people, necessitates private sector participation in productive activities. Greater financial inclusion and technical innovation can help Pakistan reap the desired dividends of CPEC. It is critical to strengthen the labour market by renewing CPEC-funded transportation and construction projects. A trained and healthy workforce remain critical to economic development and innovation. Pakistan can enhance its competitiveness in the global market by empowering citizens with education and healthcare, with CPEC offering opportunities to train the workforce and youth to tackle emerging challenges proactively.
As we move further, CPEC 2.0 is in the offing that emphasizes more openness, stakeholders’ participation, environmental concerns, and consensus building in CPEC projects’ selection. CPEC has a lot of promise for Pakistan’s growth, as long as anticipated clichés are removed. The next phase of the CPEC might be critical in deciding its long-term influence in the area and beyond. Pakistan’s incoming Government has a chance to seize the opportunity provided by CPEC as long as it builds confidence and fosters strong relations with the Chinese Government. As CPEC continues to change Pakistan’s future, its cumulative effect exhibits a commitment to promoting long-term progress, economic prosperity, and regional integration via creative and forward-thinking initiatives.
