New government in Islamabad has many challenges to overcome

Pakistan's political uncertainty may have subsided partially with the holding of elections but future trends surrounding the all too representative Karachi Stock Exchange (KSE) cannot be taken for granted.

For now, the shape of a new administration to take oath in Islamabad is being awaited by investors, with many eager to ask if this will ensure the continuity of policies all around. There are no easy answers to that question, whose outcome will indeed seal the fate of Pakistan's future.

In addition to the challenge of dealing with the complex issues surrounding Pakistan's future, there is the immediate issue of dealing with the fallout from the latest increase in domestic oil prices.

The circumstantial evidence suggests that the previous government's refusal to raise oil prices in time only allowed the budget deficit to shoot above the government's own targets. Additionally, there is the political fallout that must have an aggravating effect.

Many people still deny a close link between political trends and the economic direction of Pakistan. Yet it is virtually impossible to deny that link.

To the extent that the emerging political trends can be read with any degree of accuracy, President Pervez Musharraf's repeated assertion of the view that Pakistan's economic outlook will be jeopardised should there be a radical shift in priorities under a new government, tends to overstate the case.

The fact that there has been a bold economic recovery in recent years must present reason for optimism, with or without Musharraf in charge of the country. Countries all over the world see political shifts of the kind now under way in Pakistan with a government led by Musharraf's opponents. And yet, not everywhere do people tend to immediately predict doom because of departing leaders.

If indeed the president is forced out of power, the recovery seen during his tenure is likely to outlive his political career.

In fact, a new government may prove to be more committed on seizing fresh initiatives for a new future and proving its sceptics wrong. Notwithstanding the official claim of a sharp recovery, there are many aspects of the economy that remain unattended.

Key issue

One key challenge remains the plight of the almost one-third of Pakistan's population of 165 million, which remains below the poverty line. Even judging by the government's own estimates, at least a quarter of the population lives below the poverty line.

In reflecting on Musharraf's economic legacy, other points are also worth noting. While there has certainly been an upturn in economic growth rates during Musharraf's tenure, there are still many challenges faced by Pakistan.

And indeed, the recent political crisis has demonstrated that there are clear limits on the extent to which an economic recovery can be celebrated as a sign of a permanent upturn, as the markets and the rupee took a hit before their recent post election recovery.

A new regime will have to be built on what has been achieved rather than make a fresh new start, which may destroy the successes of previous years. A new government will also have to address the multiple challenges that remain unattended.

But by far the biggest challenge will be that a new government will have to set a list of priorities to tackle the biggest missing element.

Ultimately, all gains have to be measured in terms of what they have brought for the people of Pakistan. Evidence suggests that Pakistan remains a country with a big gap between the haves and the have-nots.

- The writer is a journalist based in Pakistan.