Political instability in Pakistan

Political Stability Essential for Economic Stability in Pakistan: A Case Study

Is Political Stability Necessary for Economic Stability?

Is Political stability provide the basis for economic stability in Pakistan? What were the factors which hamper economic stability? Since the country’s establishment, Pakistan has been struggling with economic instability. Let’s investigate how Pakistan has been dealing with this issue.

Numerous academics have conducted their research and come to the opinion that a politically unstable nation cannot become stable economically for various reasons. The findings of several studies have supported this view. To begin with, the political instability makes it impossible to put policies into effect or maintain them. In addition, when a nation’s political climate is unstable, its leaders are more concerned about implementing projects than enacting genuine reforms, turning to populist initiatives. Therefore, for this article, Pakistan will serve as a case study to demonstrate why economic stability cannot exist without political stability.

Are early days provide political stability?

When Pakistan gained independence in 1947, the country was in a precarious financial and political position. Since it lacked nearly any resources that may serve as a foundation for the growth of its economy, it was unable to maintain economic stability. It was lacking in both financial and other resources. In point of fact, in contrast to India, it did not have a capital city of its own. In addition, India did not transfer the full 17 per cent of finances that should have been given to the country during its formative years; instead, they only shared a portion of it. This was only possible after Liaquat Ali Khan flew to Delhi and Gandhi intervened to mediate the situation. As shown during its formative years, Pakistan was not a stable country.

Economic stability in the 1950s

In the early years of the country’s existence, its political stability was precarious for several reasons, including the fact that it did not have a constitution until 1956. In the same manner, the initial constitution, which wasn’t written down until nine years after the country had already been established, was thrown out only three years after it was drafted. Since then, the nation has not been able to achieve political stability because its political parties have fostered a climate that makes it easy for the military to overthrow democratically elected governments and institute dictatorships.

Political Instability

Pakistan’s economy has suffered multiple types of damage due to political unrest. The necessary institutional reforms have not been enacted or carried out. This is even though these reforms have been essential for quite some time. The annals of history bore witness to the fact that whenever attempts have been made to introduce reforms, there has never been the successful completion of the reforms’ implementation. Let’s take a look at the primary efforts that have been made to implement reforms.

Economic instability

Even though Pakistan’s economy was in a mess from the beginning, significant changes were not made to the system until the time of Ayub. This was because Pakistan was amidst a political and constitutional crisis. Ayub, who took power through a coup, instituted policies that liberalized the market after taking office. Through privatization, he was a driving force behind the acceleration of industrialization. Because of this, his time is remembered for the wealth that 22 different families possessed.

The economic reforms of Ayub Khan

Despite this, Ayub’s reforms could not be carried out in their entirety since they lacked the legitimacy necessary. Therefore, when Bhutto came to power in Pakistan after East Pakistan’s disastrous attempt at independence, he desired to implement socialism throughout the country. He nationalized large industrial complexes and sought to seize the riches of 22 families all at once. His slogan was Roti, Kappra, and Makkan.

Military Coups in Pakistan

The military coup led by General Zia ul Haqq that removed Bhutto from power in Pakistan prevented him from achieving his goal of creating socialism there. Benazir Bhutto became the new leader of Pakistan after Zia ul-death Haq’s in an aircraft crash in 1988. She did not carry out the socialist plan that had been set forth by his father. She did not significantly implement any economic reforms and maintained the status quo. Since then, all levels of government, including the military, have adhered, without deviation, to the tenets of the neoliberal economic system. But not a single government has successfully brought the necessary changes.


The objective of this brief examination of the efforts that leaders have made to bring reforms is to demonstrate that none of them has successfully introduced meaningful reforms due to political instability. The local government system that Pervaiz Musharraf first implemented is an excellent example of this type of thing. When the PPP came to power in 2008, instead of attempting to fix the system’s problems, they scrapped it and replaced it with a new one that was much less effective.

IMF and Pakistan

Since 1988, the country has been unable to finish even a single one of the several agreements it has negotiated with the IMF because it has been plagued by political instability. Every time a government agrees with the IMF, the deal veers off course or falls short of its intended goal because of the change in government. Even the recent rescue package of 6 billion dollars handed to the PTI administration could not be finished. After much political tumult and turmoil, the PTI government was dismissed from office through the vote of confidence. This is the context in which these events took place. Because of this, the current government is obligated to engage in new negotiations regarding the accord.

Political Uncertainty

The political uncertainty is causing investors to lose trust in the market because they are concerned that they may suffer a loss of capital due to the turmoil. Because of this, they avoid making investments in Pakistan. Because of this, overseas direct investment is dangerously close to zero in the country. Even the indigenous population avoids making financial investments.

Politics of Populism

Another sign of a country’s precarious political climate is when its leaders engage in the practice of pursuing populist policies and initiatives, both of which contribute to economic unpredictability. For instance, when it became clear to Imran Khan that he had very little chance of prevailing in the vote of no confidence, he turned to populist statements to rally support for himself and his party. He issued a subsidy on petroleum prices to win over the people. However, it would have disastrous effects on the economy because his administration already provided low rates for gasoline and diesel. He did this so that he could win over the people.


This is not exclusive to Imran Khan. Prime Minister Shahbaz also resorted to populist statements when he proclaimed a ten percent boost in the salaries and pensions of government employees and declared Saturday as a working day; however, later on, he was forced to rescind his decisions because of public backlash. The political uncertainty is causing investors to lose trust in the market because they are concerned that they may suffer a loss of capital due to the turmoil.


In conclusion, the administration that is currently in power will need to realize that economic stability cannot be achieved without political stability. As a result, they ought to attempt to gain political strength by holding talks with the parties that are imposing the sanctions. The only way it will subsequently be able to move toward establishing economic sustainability is once this step has been taken.

This article has been published on the Linkedin Profile of Mr Shahid Hussain Soomro https://www.linkedin.com/pulse/political-instability-pakistan-shahid-hussain-soomro/?trackingId=%2BviqDdroQ8uJayXK7EAXSg%3D%3D 

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