Pak’s main parties struggle to form coalition after inconclusive elections | World News – Business standard

Pakistan’s two main parties will meet on Monday to try to resolve differences over the formation of a minority coalition government after an inconclusive election, a top party official said, underscoring political and economic instability.

Analysts say the nuclear-armed country of 241 million, grappling with an economic crisis amid sluggish growth and record inflation along with rising militant violence, needs a stable government with the authority to make tough decisions.

Monday’s talks will be the fifth such round after former Prime Minister Shehbaz Sharif was appointed by his Pakistan Muslim League-Nawaz (PML-N) party to lead the country again.

“Both sides have not yet agreed on the final points,” said Ishaq Dar, a senator from Sharif’s party, who is leading the party in the talks.

“Negotiations are underway on various proposals” for power-sharing, he added in a statement posted on social media platform X on Sunday.

The Pakistan People’s Party (PPP), the party of former Foreign Minister Bilawal Bhutto Zardari, has announced conditional support for the PML-N, saying it will vote for Sharif to form the government but will not take positions in the cabinet .

“I can confirm that it has been decided in principle that the political parties will form a coalition government,” Dar told domestic broadcaster Geo TV.

The 72-year-old Sharif, who served as prime minister of the South Asian country for 16 months until August, has been named the coalition’s candidate to be the next prime minister by his older brother, Nawaz Sharif, who heads the PML-N. become.

KHAN-BACKED INDEPENDENTS JOIN Sunni Party Former Prime Minister Imran Khan’s jailed party members who won seats in elections will join minority Sunni party Ittehad to form a government, the party’s interim chief said , lawyer Gohar Khan, at a press conference on Monday.

Khan’s party, the Pakistan Tehreek-e-Insaf (PTI), won the largest number of seats in the elections as independents after the party was barred from running.

The interim chief said the decision to allow the PTI-backed independent candidates to join another party was taken so that the party could gain access to the reserved seats allotted to women and minorities.

Pakistan narrowly avoided a sovereign default last summer with a $3 billion bailout from the International Monetary Fund, but the lender’s support ends in March, after which a new, expanded program will be needed.

Quickly negotiating a new program will be crucial for the new government.

Pakistan’s dollar-denominated government bonds fell as much as 1.2 cents on Monday, while the 2024 bond stood at 95.89 cents in the wake of the contentious election, Tradeweb data showed.

“Lack of clarity has always been a killer for the market as it makes existing and potential investors indecisive about their prospects,” said Amreen Soorani, head of research at JS Capital, adding that this was reflected in the choppy market.

Pakistan’s vulnerable external position means that securing financing from multilateral and bilateral partners will be one of the most pressing issues facing the next government, according to ratings agency Fitch.

“A new agreement is crucial for the country’s credit profile, and we expect this to be reached within a few months, but protracted negotiations or the inability to finalize this agreement would increase external liquidity stress and increase the risk of default,” the report said. said.

The new government could also face further political tensions, with independent MPs backed by jailed former Prime Minister Imran Khan forming the largest group in the legislature.

This group is at odds with the powerful military and claims the vote was rigged.

The interim government and the election commission have rejected these allegations.

First print: February 19, 2024 | 5:08 PM IST