A government without a mandate cannot fix Pakistan's economy

A forecast with a confidence level

This is the second part of a two-night series recorded the evening before Pakistan’s 8 February 2024 election. The first episode was history. This one is prediction, and Muzamil is clear about what that means. “I am a data analyst by profession,” he says. Analysts are trained to look at a data set, compare it with similar ones, and forecast. A forecast that is 70 percent likely still carries “a 30 percent chance that it is not true at all.”

He also rules out any special source. “I have no inside information. This is just based on certain variables.” He calls the exercise a war game: set out the forces, the incentives and the constraints, then see which outcomes follow.

Two ideologies, with the establishment set aside

Muzamil starts by naming two sides. He sets a third force, the establishment, aside to deal with on its own.

The first side is PTI. In his summary, its narrative resembles Donald Trump’s: the status quo serves rent seekers, oligarchs and a ruling class that has run Pakistan for 50 years. The fix is an overhaul. Break the power of the established elite, strengthen the rule of law, and let people below rise on their own. Abroad, he says, PTI wants to step out of American influence without simply moving into China’s camp, and to build an alternate bloc with partners such as the Middle East, Turkey, Malaysia and possibly Central Asia.

The second side, which he describes as everyone else gathered together, wants stability. Its argument is that the existing system can be managed better and that radical change would be too painful right now. Its view of the world is short term. Fix the economy first, and accept that only the United States has the money to help, even if that means tilting toward the Western camp.

He is careful about why the second side resists change. Reform always picks winners and losers. Opening the dollar rate helps exporters and hurts importers. Behind every importer, real estate business or protected industry sits a chain of employees who know they will be hit. “There is a very big class,” he says, and it reaches well beyond the ruling elite.

The numbers behind the pressure

Muzamil calls the economy the heart of the war game. If it fails, everything else fails with it.

He lists the figures he is working from. According to Dr. Hafeez Pasha, Pakistan must return about 35 billion dollars in loans over the next three years. Rupees in circulation have roughly doubled in four years, from 5 trillion to 10 trillion. The caretaker government borrowed 4 trillion rupees in a single year. Net interest payments now exceed tax collection.

From there he walks through the options. Pakistan has to go to the IMF, which may offer a deal of 5 to 7 billion dollars and unlock more from the World Bank and other lenders. IMF conditions mean ending subsidies, raising prices and opening markets. That brings a wave of inflation.

The fiscal gap leaves two more choices. Raise taxes, and people’s buying power falls. Cut the development budget and keep borrowing, and more money chases the same output, which he compares to the inflation spirals seen in Venezuela. Either way, he says, the result is frustration, and frustration turns into aggression.

This is where the mandate matters. “A government with popular support can do it, because people tolerate it,” he says. Voters who chose a leader accept five years of hard decisions. A government they did not choose gets no such patience.

What the surveys say, and what he predicts

Muzamil cites the surveys circulating that week: Dawn, Gallup, and a survey by Habib Akram of 34,000 people across Pakistan. In his reading, every one of them shows PTI as the party with majority public support. He also notes that PTI had lost its election symbol, that its candidates were running as independents, and that many of its people could not campaign.

He says he is not judging whether the public is right. “I am only focused on the fact that the public actually wants PTI to come,” he says. From that, his forecast follows. He expected a PML-N government, with Shahbaz Sharif as prime minister and Bilawal Bhutto as foreign minister, formed as a loose alliance without a public mandate.

He then tests the alliance’s likely plan against its own record. Between 2013 and 2018, he says, CPEC investment and low oil prices let a government hold the dollar down and show a semblance of growth, until the current account deficit forced a correction and a crisis in 2018. Under the PDM government, he says, the dollar was held near 220 rupees for about ten months before it broke. Each time the control lasted less long.

This time, he argues, the outside money is not there. The United States is spending heavily on Ukraine and Israel in an election year. Saudi Arabia has said on record that it will invest but will not hand out free money. The deals being discussed, such as selling PIA or agriculture investment, are worth millions, while Pakistan needs billions.

The information age is the disease

The core of the episode is a single thesis. Muzamil believes the other side has misread where public sentiment comes from. They assume one man created it, and that removing him and his party will make the public drift elsewhere.

“Imran is a symptom,” he says. “The disease is the information age.”

He points to the same pattern abroad. Leaders described as populists or nationalists, such as Narendra Modi in India and Recep Tayyip Erdogan in Turkey, have risen because access to information has changed what publics demand. In his view, much of PTI’s support over the past two years is a vote against the old order more than a vote for one person. He adds that at the time of the no-confidence vote, PTI’s popularity was much lower.

He backs the point with India’s Congress party. He reads out its seats in the Lok Sabha: 364 in 1951, 415 in 1984, then a long decline to 44 in 2014 and 52 in 2019. A party run by one family, close in ideology to the People’s Party, has been rejected by a post-internet public. He sees the same rejection of dynastic politics in Sri Lanka.

Then he makes his longer forecasts. Over the next two to three years, he expects PML-N to lose Punjab entirely. Within five years, he thinks the People’s Party will struggle to form a government even in Sindh. The leaders on every side are over 70, and a younger, more ideological generation is coming up behind them.

Why the old alliance cannot reform itself

Muzamil does not frame this as good people against bad people. He tries, in his words, to humanize every side.

He looks at who sits in each camp. The remaining PTI candidates, as he sees them, are largely grassroots workers and lawyers with no stake in the old economy. They would sign off on reforms because nothing of theirs is at risk. The other alliance includes sugar interests, real estate businessmen, old political families and big industrialists, all tied to the old economy.

He uses himself as the test. If he came to power and the right policy were to ban YouTube, Facebook and Instagram, he would hesitate, because his own lawful business depends on them. “I would think ten times,” he says. People protect what they built, and they rationalize it. He says the same thing happened in India, Indonesia and Turkey.

He also points to Egypt. A populist leader, Mohamed Morsi, was overthrown and replaced by an authoritarian government that the Gulf states and the United States sustained with tens of billions of dollars. Muzamil’s point is that money was available in 2012 and 2013. The world economy is tighter today.

A last stand, then a reset

His conclusion is that the coming government will be “a confused, PDM-style government” with infighting and no clear reform path. He expects instability within 12 to 24 months, a new election, and then a government that arrives with economic and constitutional reform. He says he would like Miftah Ismail to be finance minister in that government, because he believes Ismail is the right person for the policy reforms Pakistan needs.

He recommends reading about India in 1991, when a short-lived government tried to keep the old socialist model before reforms came. He also recommends Indonesia in 1998, when a power structure that looked permanent broke and growth followed. He cites Ray Dalio’s book on the changing world order, saying its description of a declining empire reads like Pakistan over the past 20 years.

He hedges the whole forecast. “This could be complete quackery,” he says, and he hopes he is wrong. He hopes the new government, whoever leads it, makes Pakistan better. He calls himself optimistic in the grand scheme and pessimistic in the short term.

Vote, and collect the number

He ends with one request for election day. Vote, and stay at the polling station. Collect Form 45. Help protect the process. Even people who think the exercise is futile should vote, he says, because the real numbers matter: “We need data on how many people in Pakistan actually support whom.”

He warns both camps against extremes. Winners should not expect paradise, and losers should not lose hope. In his view, how Pakistan evolves will depend less on any party and more on how mature its political discourse and its access to information become.

He also announces that this is his last political episode for now. Next, he plans to talk about IT, startups and individual industries.