The Economist - UK (2022-06-04)

46 Asia The Economist June 4th 2022

lations with the West. But it has not yet de-

vised a strategy to tackle the economic cri-

sis it inherited. In part that is because Mr

Khan’s protests have kept it distracted. Mr

Sharif has also failed to seize the political

initiative. Last month the country watched

the flailing prime minister board a plane to

London to seek advice from his older

brother, who lives in exile.

The country’s finances are in wretched

shape. The pandemic and the fallout from

the war in Ukraine have battered an econ-

omy already reeling from decades of mis-

management, outsize military spending

and a focus on debt-driven infrastructure

projects that generated no returns. Infla-

tion hit 13.8% in May, driven largely by the

price of food and transport. The rupee has

lost 8% of its value against the dollar since

early April (see chart). Foreign reserves had

dwindled to $10bn by May 20th, enough to

cover imports for only about six weeks.

The reserves are at their lowest level

since 2019, when Pakistan last sought help

from the imf. Only half the $6bn bail-out

agreed at the time has been disbursed. Mr

Khan, then prime minister, originally

agreed to cut subsidies and reform the

economy but reduced fuel prices instead.

The country is running deficits on both its

budget and its current account. It needs

some $37bn worth of financing for the fis-

cal year beginning in June, reckons the fi-

nance minister.

On May 26th Mr Sharif at last seemed to

act more decisively. The government an-

nounced a cut in fuel subsidies, raising

prices by 20%. This won approval from the

imf, which has made the resumption of its

loan programme conditional on policies to

stabilise the economy. The currency and

the stockmarket rallied slightly in re-

sponse to the move. A bail-out will also un-

lock credit from allies such as China and

Saudi Arabia, which are unwilling to ex-

tend more help without assurances that

the imfwill release the bail-out money.

To obtain those, the government will

have to introduce more unpopular mea-

sures. This month it is likely to announce

cuts to subsidies on electricity and the pas-

sage of an austerity budget. But dissolving

parliament and calling early elections

would distract from the goal of improving

macroeconomic stability, even though Mr

Sharif could win a real mandate. The imfis

unlikely to take seriously a government

that may not be in power for more than a

few weeks, particularly given the risk that

Mr Khan might return to power. Early elec-

tions would probably need approval from

the generals. No matter what ptiinsiders

claim, this will be harder to gain than it

might have been a few months ago given

new hostility towards the army among Mr

Khan’s supporters.

Even so, Mr Khan does not appear to be

giving up hope. He is petitioning the Su-

preme Court to guarantee safe passage for

potential follow-up marches. The coming

spate of painful economic moves will sup-

ply him with plenty of excuses to paint the

government as American stooges and ene-

mies of the people. The appointment of a

new army chief, due in November, will add

yet more uncertainty to the political bal-

ance. To fix its economy, Pakistan badly

needs stability. It will spend the coming

months with anything but. 

Trough going

Pakistani rupees per $

Inverted scale

Source: Refinitiv Datastream

225

200

175

150

125

100

2017 18 19 20 21 22

Kazakhstan

The rights of

one man

W

hen kassym-zhomart tokayevbe-

came president of Kazakhstan in

2019, he promised his people a “listening

state”. But even a deaf one would have

heard the clamour in January, when Kaz-

akhstanis took to the streets to register

their displeasure at rising fuel prices. As

the protests spread, the demand morphed

into one for broad political change. Some

230 people were dead before order was re-

stored to the streets.

Five months down the line, Mr Tokayev

(pictured, right) is keen to show that he has

been listening. On June 5th Kazakhstanis

will vote in a referendum on wide-ranging

constitutional reforms that he hopes will

reset relations between the state and its

citizens. He promises to build a “new Kaz-

akhstan”, which he bills as a “second re-

public”. It will replace the discredited one

he inherited from Nursultan Nazarbayev

(pictured, left), his strongman predeces-

sor, who ruled for nearly three decades.

The referendum is a yes-or-no affair co-

vering a package of 56 measures, some of

which are so arcane that even the presi-

dent’s allies admit that ordinary voters

may not grasp them. One is to replace the

constitutional council with a constitution-

al court; another is to turn the budget-con-

trol committee into an audit chamber. The

reforms will almost certainly pass. The

choice is between retaining a much-dis-

liked status quo and choosing change,

however limited.

Mr Tokayev wants to transform what he

calls the “super-presidential” system es-

tablished by Mr Nazarbayev into one with

greater checks and balances. Central to this

is the removal of all mention of Mr Nazar-

bayev from the constitution. He will lose

his bespoke powers and privileges, includ-

ing immunity from prosecution and the

right to rule in tandem with Mr Tokayev.

Close presidential relatives will be banned

from holding senior public positions.

Yet the reforms do more to curb the

power of the ex-president than of the presi-

dency itself. Mr Tokayev will still appoint

the prime minister, cabinet members, se-

curity chiefs and the heads of the central

bank and constitutional court. It is true

that he will lose the right to strike down

statutes passed by local mayors and gover-

nors. But they are his appointees.

Mr Tokayev says his new Kazakhstan

will offer a more level political playing

field. He is adamant he wants the next elec-

tion—which is due in 2026 but may be

called early—to deliver a more robust par-

liament under a reformed electoral sys-

tem. The president and many other offi-

cials will be barred from joining political

parties. He also promises to make it easier

to form parties. The number of signatures

needed to support an application will fall

from 20,000 to 5,000. Yet a similar reduc-

tion two years ago made no difference. All

new applications ahead of an election last

year were rejected. Mr Tokayev has for

years tried to play the reformer. What he

does with his probable referendum victory

will show how much he means it. 

ALMATY

Proposed constitutional changes will

mean less power for the ex-president

Go quietly or we’ll rename the capital