On Senate elections: a big upset?

March 4, 2021 (MLN): In Pakistan, one can almost always count on cricket and politics to deliver on drama. Look at Lahore Qalandars — the side infamous for losing in the Pakistan Super League is having a dream run this year. In a similar vein, the PPP, which in the last general elections was nowhere close to the PTI and PML-N just scored a major win in the upper house.

Former prime minister Yousuf Raza Gilani’s win in the Senate elections yesterday may not be a major setback for PTI keeping in view the fact that the party has gained a majority. However, the outcome has surely raised major question marks on parliamentarians’ confidence in Prime Minister Imran Khan.

Why? Because the premier was personally spearheading the campaign for Shaikh’s win and his loss chips away at PM’s credibility. The events leading up to the elections including the kidnapping of parliamentarians, sting operations catching horse-trading by the PPP may have tarnished the political elite in the country, but the results clearly show that the old guard of Pakistan politics is not willing to let go that easily.

Moreover, PM’s handpicked Minister for Revenue and Finance Dr. Hafeez Shaikh’s loss also lays bare the cracks within the PTI. But beyond the political costs, Dr. Shaikh’s loss means the PTI will have to begin headhunting to replace him. Dr. Shaikh’s ouster from his current portfolio is almost certain as he only has three more months after which the grace period allowed to him by the Supreme Court is set to expire.

The damage won’t stop here. There is a strong likelihood that markets are going to roil at this loss.

“On the market side, a knee-jerk reaction to FM Hafeez Sheikh’s loss will likely weigh heavily, albeit in the near term. In the long run, however, we believe any downward movement is likely an accumulation opportunity,” warn AKD Securities’ analysts.

Dr. Shaikh’s loss will further trickle down into other fronts. Take the ongoing Extended Fund Facility (EFF) with the International Monetary Fund, which was being led by Dr. Shaikh after he replaced Asad Umar. There is bound to be a lot of chatter on that front until a name is finalised to replace Dr. Shaikh. However, that will also evaporate as the IMF programme hinges on achieving the structural benchmarks and if Pakistan delivers on those, there isn’t much to worry about on that front as well.

Overall, as the noise around Dr. Shaikh’s loss tones down, the elections are net positive for the PTI. The results show the party now has a clear majority in the upper house which paves the way for key legislations to sail through without much resistance.

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