Geopolitical developments… The polarization in the world at the moment also concerns the power centers in other countries that are trying to determine a position in terms of power balances, and power changes are taking place over this. In Pakistan, the no-confidence vote, which was canceled by Prime Minister Imran Khan on the grounds of the American intervention, was held this time with the annulment of the decision, and a change of government took place. The new Prime Minister is Shahbaz Sharif, brother of former Prime Minister Nawaz Sharif, who is currently in exile in London. This change is also important in the sense that it shifts the political axis of the country.
Getting closer to the US camp… Imran Khan had good relations with Russia. So much so that he did not condemn Russia even in the occupation of Ukraine and even had a meeting with Putin. The newly established government of Shahbaz Sharif will shift the axis towards establishing good relations with the US and the EU. Thus, the Russian camp also lost a supporter. China, on the other hand, will be neutral in this situation as long as the Silk Road plans are not hindered, but will always look positively towards a Pakistani cooperation against India. With Sharif becoming prime minister, it is possible to hold general elections before August 2023. Rupee seems to have taken this situation well, as Khan's departure also looks positive in terms of political stability and IMF aid, and is expected to have a positive impact on foreign capital.
The economy… From the point of view of economic stability, the most urgent task of the new government will be to sign an agreement with the IMF for the remaining $3 billion loan from the $6 billion bailout agreed in 2019. Pakistan needs IMF support to close the widening external financing gap of dollar-debt repayments and a booming current account deficit. The IMF program normally ends in September.
Conclusion? The establishment of a new administration under the sheriff may provide short-term relief. A more stable political environment is envisioned after Khan's departure, but this analysis is entirely based on the country's move away from Russia and closer to the US and EU. It is also thought that with a friendly government, it will be able to receive IMF aid more easily. As a result, another government change took place in a painful process in a country whose history was full of political instability. Many countries and power centers feel that they have to make their political choices over the US or Russia.
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