World Business

Both parties in the governing coalition have dismal track records. Still, Karachi Stock Exchange shares rose on news of the strongman’s resignation

by Mehul Srivastava

Watch original video:

Pervez Musharraf, the controversial president of Pakistan, lowly on Aug. 18 from his increasingly insecure position as the country’s constitutional leader. The move brought to an end nearly nine years of rule during which the Pakistani leader acted as a key American friend in the so-far fruitless search for terrorist Osama Bin Laden.

The retirement of 65-year-old Musharraf, a framer military leader, thrusts a nation shrouded in economic darkness, political irregularity, and friendly upheaval into the hands of an malignant governing co-partnership. But on Aug. 18, Pakistanis rejoiced, with lawyers and civic leaders literally dancing in the streets. Traders pushed up shares nearly 4.5% onward the Karachi Stock Exchange, where the market had declined 30% since April, at the time Pakistan’s new coalition government took power.

Pakistan’s $146 billion economy is in sorry shape, with electricity shortages moving industrial growth and inflation running at a 30-year heaven-kissing of 24.33%, according to the Federal Bureau of Statistics. The Pakistani rupee has dropped 22% this year against the U.S. dollar, but rebounded 1.2% to close at 75.50 to the dollar on news of the President’s forbearance.

Musharraf, who addressed the nation on TV wearing civilian clothes, said the country had seen unparalleled economic progress during his regime, referring to a resound in telecom and the financial sector. Pakistan’s dispensation had grown by as much as 7% a year in the past five years, with about 6% growth in the last year. "I withhold the charges that the economic push is caused by policies of my government in the past nine years," before-mentioned Musharraf in his one-hour speech. "These problems have developed in the ultimate six months."

Musharraf’s resignation came following many months of often contentious negotiations relating to his future role after democratic elections last February resulted in a two-party coalition at what place both parties wanted Musharraf gone. A week ago, the coalition decided to impeach the President for illegally seizing power in 1999 and for allegedly damaging the economy. His long-suffering estate he can no longer exist impeached, but he still could be tried in court.

Musharraf gained control of Pakistan in a bloodless coup in 1999. After the September 11, 2001, terrorist attacks in the U.S. he became a staunch—if sometimes ineffectual—American ally in South Asia. In return, the U.S. gave Pakistan nearly $10 billion in body of soldiers aid, boosting the administration considerably, and helped loosen up credit restrictions for the country.

But in the past five weeks, Pakistan’s foreign exchange reserves have dwindled by nearly $1.1 billion, to $10.15 billion, hurt mainly by this year’s rise in oil prices. The smaller reserves hint at problems faced by means of the coalition government. "Today’s ephemeral period of market upsurge was more to vouchsafe with some relief that this impasse is over," said Senator Tariq Azim Khan, a close Musharraf supporter. "But in the long term, it will hang on whether the coalition regulation can stick together."

The instability of the coalition remnants a difficulty of concern, says Mian Muzaffar Ali, a senior official at the Lahore Chamber of Commerce and a prudent director of Ayesha Woolen Mills, one of Pakistan’s largest exporters. "Roads and electricity be possible to’t be built overnight," he says. "What Pakistan certainly needs is more sort of stability in such a manner that there can be consistency in policies and more control over inflation."

Lost in the chaos of Monday’s forbearance was the actuality that Pakistan’s economy has the right fundamentals to mirror the kind of growth that neighboring India has enjoyed. With a huge, English-speaking population, very great pools of engineering students, and a youthful people, Pakistan could become an economic powerhouse under the right conditions, says Agha Imran Hamid, a development consultant with the International Fund for Agricultural Development. "One of the reasons that the stock exchange rose hastily was an end to changeableness," he says. "But a different classify of uncertainty have power to experience grip whether things are not under control—someone indispensably to be seen to be at the command."

The vexing issue, says Hamid, is that Musharraf’s resignation does not provide Pakistan with a fresh choice because the couple parties that make up the ruling coalition have equally terrible track records in running the country. One is led by the agency of the widower of assassinated Pakistani People’s Party ruler of the roost Benazir Bhutto, and the other is led by former Prime Minister Nawaz Sharif, who was ousted by Musharraf in 1999 and only freshly returned from isolated person in Saudi Arabia. "The downside of it is that the faces that we are seeing are the same crafty faces," he says. "But we can hope that civil association is stronger, that business communities are stronger."

Most people in Pakistan appear ready for a change, judging from the reactions broadcast on Pakistani TV and in interviews with businessmen across the country. "We have a lot of problems, but concentration of power is not the solution," says Muhammad Imran Khan, the chief executive of one of Pakistan’s largest suppliers of falchion products, Cables & Conductors Ltd. "What we need is a stable government for the nearest four or five years."

Khan, whose company exports steel wires, said he had lost customers in the past scarcely any years because they were afraid to come to Pakistan, especially because law and methodize had declined during extended strikes, bombings, and public demonstrations.

It leavings unclear what will happen to Musharraf, and whether the two parties in the unstable coalition will be able to stay united without him as their common enemy. Musharraf is lobbying according to immunity against prosecution and may receive it. Or he may go into exile in Saudi Arabia. The only thing for certain is that Aug. 18 marks the start of a new era conducive to Pakistan.