Tough times ahead
Uncertainty is not over yet. Nawaz is no more the PM; but he is still calling shots at PMLN and is driving the government. On the face of it, PMLN is showing a game plan of interim PM, to be replaced by Shahbaz Sharif in 45 days. The question is will that be an eventuality, or tough times are yet to come for Sharif family?
If the scenario of exchange rate, accommodating monetary policy, portrayed by PMLN leadership becomes reality; everything is kosher. Shahbaz may turn out to be a more aggressive leader, projects at federal level may accelerate and economic policies of controlled taxation on existing base may continue till 2018 election. No crisis would be in offing and stock market may recover and bulls may dominate.
However, that might be not the case. If the JIT report is any guide, the NAB trail may follow a similar pattern. Mind you, forensics are sophisticated today and any forgery can be easily caught. And this may even tighten the rope on Sharif family and could result in end of close to four decade of Sharif family politics.
Now these are two extreme situations; reality could be somewhere in between. The Supreme Court has probably given an easy exit to Nawaz as the reason of his disqualification is though as per the laws, it is against the norm of country’s political reality.
Supreme Court could have had a harder stance on Nawaz on the basis of JIT report. Experts opined that the apex court has given Nawaz a soft exit. To put it bluntly, Nawaz has time to run before the ECL sees a new entry.
The cases will be referred to NAB and the chairman will have little power to have an impact on these cases. If the NAB proceeds on the footsteps of JIT, tough times are ahead not only for Nawaz but also for Dar and even the PM in waiting after Abbasi, could be in for some trouble.
NAB hearing may start shortly and the family corruption cases and their lack of evidence would start pouring in news. Just like the things moved at the time of JIT proceedings. The PMLN would start losing grip on the happenings as today even Nawaz without being PM, the party is well in control at the helm of economic affairs.
The question is on the continuity of economic policies, if real trouble hits Sharif family. The foremost factor is CPEC - there is no problem. There is political consensus on the CPEC and military is taking care of its security. Thus CPEC related projects will continue and new projects will come, perhaps may be with a lag.
The second factor is private sector investment - expansions in various sector will remain unaffected; however, new planning may come to a standstill till the political cloud is clear.
Last but not the least is the continuation of growth momentum; the confidence is gained and economy is growing at good pace.
The currency is stable as foreign exchange reserves are not falling fast despite high current account deficit. The country is raising debt comfortably as of now. If the PMLN remains strong, the policies may continue till 2018 election and confidence may remain intact.
However, if the NAB scrutiny hits the Sharifs, government may lose control, and currency may start depreciating. The economy may slow down a bit. Yes, the booming middle class story is real; but it may take some time before the momentum is regained, till the time bear may dominate. Here is hoping the process of accountability does not stop here as an “on-off” event, and whoever else has been on the wrong side of things, is brought to justice.
