The BGA Pakistan Team, led by Senior Adviser Aniq Zafar, wrote an update to clients on what to expect with Pakistan’s new Cabinet. 

Context

  • Pakistan’s second-time Prime Minister Shehbaz Sharif selected a 19-member Cabinet on March 11, a week after being sworn into office. Earlier, Pakistan People’s Party (PPP) co-Chairperson Asif Ali Zardari was elected president for the second time on March 9 by a large margin against the preferred candidate of jailed former Prime Minister Imran Khan. Khan’s party, Pakistan Tehreek-e-Insaf (PTI), has refused to accept the outcome of last month’s general election, which was marred by allegations of vote rigging and irregularities. It has since challenged the results of various constituencies in the courts.
  • Sharif’s government must now respond to the country’s economic crisis and seek a loan from the International Monetary Fund (IMF) before the current bailout program ends in April. More than half of the upper house of Parliament retired this week, leading to a dysfunctional Senate until the polling to fill the vacant seats, which is scheduled for April 2.

Significance

  • Asif Ali Zardari and his son, Bilawal Bhutto Zardari, have decided they will not join Sharif’s Cabinet, leading analysts to believe the new government will be vulnerable to being toppled. The PPP leadership agreed to back Sharif for the prime ministerial election in exchange for ex-President Asif Ali Zardari’s nomination as president. Zardari may not have formal powers in the ceremonial role, but he will have significant influence behind the scenes. He will keep his position for the next five years.
  • Khan’s independent candidates have been fighting for reserved seats in Parliament to extend their numerical strength. PTI-backed independents joined hands with the Sunni Ittehad Council (SIC), a right-wing party, for this reason. In the end, the electoral body ruled against Khan’s PTI and said the SIC could not claim reserved seats in the national or provincial assemblies, a decision the PTI leadership has challenged in the top court. If the decision is not overturned, the ruling coalition could gain a two-thirds majority in the 336-member Parliament.

Implications

  • Companies can expect Sharif to prioritize curbing inflation, but other challenges include tackling the lingering economic crisis, attracting investment, managing a weak coalition and negotiating a new IMF program. Pakistan has a better chance of securing a new IMF loan package thanks to the difficult reforms of Sharif’s previous administration, including removing the fuel subsidy and raising energy prices to meet IMF conditions. The PML-N leadership has also hinted at the privatization of underperforming entities.
  • Businesses should watch out for the new finance minister, Aurangzeb, to reform the tax system and overhaul other policies to achieve macroeconomic stability. The ruling coalition considered his selection carefully and was torn between appointing PML-N stalwart Dar and a new candidate for the role of finance minister. The failure of the last $6.5 billion IMF bailout package during Sharif’s previous term was blamed on Dar and prompted a reassessment of his suitability for the role. Sharif has now split the responsibilities for the minister of finance, revenue and economic affairs. Aurangzeb has been given the finance portfolio and was temporarily put in charge of the Revenue Division. Cheema, another technocrat and former aide, has been named economic affairs minister.

We will continue to keep you updated on developments in Pakistan as they occur. If you have any comments or questions, please contact BGA Pakistan Senior Advisor Aniq Zafar at azafar@bowergroupasia.com.

Best regards,

BGA Pakistan Team

A small ginko leaf

Senior Advisor

Aniq is one of Pakistan’s most experienced business and public relations advisors, maintaining networks throughout the country’s public and private sectors, civil society and diplomatic circles. As a former journalist, Aniq also has strong relationships in the vibrant and rapidly expanding domestic media environment. Prior to joining BGA, Aniq worked with global clients across sectors on developing communication strategies, crisis communication, understanding regulatory frameworks and political risk assessment. He advised multinational clients from sectors including telecommunications, fast moving consumer goods, tobacco, agriculture, infrastructure, airlines and energy, as well as international development organizations. In the public sector, Aniq advised Pakistan’s Federal ... Read More