The Economist - UK (2022-04-09)

46 Asia TheEconomistApril9th 2022

publicmood,hasrespondedwitha mixof

intimidationandineptitude,producinga

politicalcrisistocompoundtheeconomic

disaster.OnApril1stMrRajapaksa,appar­

entlyspookedbydemonstrations outside

hishome,declareda stateofemergency.

Thatgavethearmywide­rangingpowersto

quellunrest.Whenthisfailedtodissuade

protesters, he imposed a weekend­long

curfewanda banonsocialmedia.People

returnedtothestreetsanyway.

On April 3rd the president changed

tack.He restored social media anddis­

missedhiscabinet,leavingonlyhimself

andMahinda,nowprime minister. The

nextdayheliftedthecurfewandnamed

fournewinterimministers,includinga fi­

nanceministertoreplaceanotherRajapak­

sabrotherwhohadpreviouslyheldthejob.

Stabilityremainselusive.AliSabry,the

newfinanceminister,resignedonApril

5thafterjust 24 hoursinthepost.Onthe

samedayMrRajapaksa’scoalitionpartners

withdrewtheirsupport,leavingthegov­

ernmentwithouta parliamentarymajori­

ty.Thepresidentrevokedthestateofemer­

gency afew hours later. Protesters still

wanttheremainingRajapaksasgone,but

Gotabayahasgivennoindicationthathe

willresign.Theoppositionhasrejectedhis

call to join an interim government. It

seemsreluctanttotakechargeinthemid­

dleofa crisis.SriLankacannotaffordto

runa freshelection.

Thecountrymustpay$7bn,roughly9%

ofpre­crisisgdp, indebtandinterestpay­

ments,mostofitdollar­denominated,by

theendoftheyear.A $1bnbondpaymentis

dueinJuly.SriLanka’sdollarreservesare

nearlygoneandit hashadnoaccesstoglo­

balcreditmarketsfortwoyears.Indiahas

extendedcreditlinesandassistanceworth

some$2.5bn,andhaspostponedpayments

ondebtowedtoitscentralbank.

ButSriLankaurgentlyneedsa stayon

otherdebtrepaymentstoavoida messyde­

fault.Itwillalsoneedfurtherlinesofcred­

it or aid—perhaps through the World

Bank’s existing pandemic­relief mecha­

nism—toimportfoodandfueloverthe

comingmonthswhileitnegotiateshowto

restructure longer­term debtand regain

accesstobondmarkets.

Thelack ofastablegovernment will

makethosediscussionsallthemorediffi­

cult.Initialtalkswiththeimfbeganthis

weekbutofficialnegotiationsmaybede­

layeduntilthepresidentmanagestoap­

pointa newfinanceminister.Yeta bail­out

bythefundisa crucialfirststeptowards

solvingthecrisis.Othercreditorsareun­

likelytoagreetonewloansortherestruc­

turingofexistingoneswithoutitsbacking.

Thingsarenotentirelyhopeless.Both

thedecisiontotalktotheimfandtheap­

pointmentofP.NandalalWeerasinghe,a

respectedeconomistwhowasduetotake

overasthenewheadofthecentralbankon

April7th,suggestthatthegovernmentmay

havegraspedtheseriousnessofthesitua­

tion.WhetheritcanconvincefuriousSri

Lankansthatit deservesa chancetofixthe

messisanotherquestion.n

Plumbingnewdepths

Currenciesagainstthe$,January1st2020=100

Source:Bloomberg

110

100

90

80

70

60

50

2020 21 22

SriLanka

Pakistan India

Centralbankdropspeg

Pakistan’spoliticalcrisis

Not cricket

I

f imran khan’sopponents hoped their

push  to  unseat  him  would  move  at  the

blistering  pace  of  a  Twenty20 cricket

match,  the  Pakistani  prime  minister  has

instead  dragged  them  into  the  slog  of  a

five­day Test. Tension had been building as

Mr  Khan’s  precariously  ruling  coalition

frayed. It looked as if enough defectors had

joined  the  opposition  to  bring  down  his

government  in  a  no­confidence  vote  in

Pakistan’s National Assembly on April 3rd.

But  the  prime  minister,  who  captained

Pakistan’s  triumph  in  the  1992  World  Cup

cricket final, bowled a googly. He declared

the bid to unseat him a foreign conspiracy,

dodged  the  floor  vote,  dissolved  parlia­

ment and called for fresh elections.

Opposition  legislators  cried  foul.  They

said Mr Khan had violated the constitution

by getting the deputy speaker of the assem­

bly, a close ally, to quash the vote on vague

grounds  of  a  national  security  threat.  The

Supreme Court was called in to umpire the

mess.  The  judges  have  refused  to  be

rushed. On April 6th they held a third day

of  hearings,  and  were  due  to  resume  on

April 7th. Pakistan is meanwhile in consti­

tutional deadlock.

If  the  judges  rule  against  Mr  Khan,  the

no­confidence vote will be held and he will

almost certainly be out of power, less than

four  years  into  his  five­year  term.  A  new

government,  probably  a  broad  coalition

ledbyShehbazSharif,thebrotherofMr

Khan’spredecessorNawazSharif, would

thenbeincharge.

Thecourtcouldruleinsteadforfresh

electionsunderacaretakergovernment.

Bylawsucha voteshouldtakeplacewithin

90 days,butofficialssayitmighttakelon­

gertoprepare.ThiscouldgiveMrKhan

whathewants,whichistimetomounta

counter­offensive against opponents he

beratesascorrupt. Thecourt couldalso

simplydither.Thelongerthelegalstand­

off ensues, theless inclined thejudges

wouldbetoreconstitutetheassemblyand

reimposethevote,theoppositionfears.

The crisis has flaredquickly and re­

flectsa rapiddownturninMrKhan’sfor­

tunes.The69­year­oldwonpowerin 2018

onananti­corruptionplatform,promising

to dislodge thecountry’svenal political

elite.HealsovowedtocreateanIslamic

welfarestate.

Butthoughhehadsomesuccessavert­

ingdamagefromthepandemic,extending

a socialsafetynetandofferinghealthin­

surance,Pakistan’sworseningeconomyis

hurting ordinarypeople. Inflationis al­

most13%(seechart).ThePakistanirupee

tradesatmorethan 180 tothedollar,50%

morethanwhenMrKhantookcharge.The

WorldBanksaysgdpperpersonhasfallen

fromnearly $1,500in 2018 to $1,200in

2020.MrKhan’sconfrontationalstyleand

insistenceonjailing“corrupt”politicalop­

ponentsalsoleftlittleroomtomanoeuvre

whiledefendinga slimmajority.

Butmanybelievethebiggestfactorin

hisfallhasbeena breakdowninrelations

withthechiefofthearmystaff,GeneralQa­

marJavedBajwa,thoughMrKhandeniesa

rift.Thearmyforitsparthasalwaysinsist­

ed,implausibly,thatitispoliticallyneu­

tral.Foryears,MrKhan’sopponentshave

chargedthatheoweshisascentsolelyto

thepowerful,unaccountablemilitaryes­

tablishmentthathasruledPakistandirect­

lyformuchofitshistoryandpulledstrings

formuchoftherest.

GeneralBajwaandMrKhanappearedto

clashinOctoberoverwhoshouldbehead

I SLAMABAD

Imran Khan is trying every trick in the

book to stay in power

Reaching new heights

Consumer prices, % increase on a year earlier

Source: Bloomberg

Pakistan Sri Lanka

India

Imran Khan becomes

Pakistan’s prime minister

20

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