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Maplecroft’s post-Election Monitor for Pakistan provides analysis and forecasts for domestic and foreign policy and the implications for foreign investor following the 11 May elections.

The elections in Pakistan resulted in a convincing victory for Nawaz Sharif and the PML-N. As the largest party by a broad margin, Sharif will have no problems forming a coalition government. The army is also extremely unlikely to destabilise the voting process or eject a Sharif-led government through a coup, at least in the medium term.

The Monitor forecasts that sectarian violence against the Shia population is likely to continue unabated as the Sharif government is expected to be more lenient against extremists. The insurgency can also be expected to continue with the same strength and it remains to be seen if the political discourse of Imran Khan will facilitate anti-US sentiments as he forms a government in Khyber-Pakhtunkhwa. A Sharif-led government is unlikely to initiate any drastic changes to Pakistan’s strategic or foreign policies.

The energy crisis is one of the primary problems facing the new government. Although a new ministry is planned to deal with this, it remains to be seen how the already cumbersome bureaucracy of Pakistan will be affected by yet another institution. While some structural reform is needed in order to obtain a much needed IMF loan, this is likely to also run in the face of established practices of patrimonialism and thus resistance from within the government itself.

A change in government is unlikely to result in major regulatory changes. However, as energy shortages will continue, Pakistan’s industrial productivity will remain constrained. Donor confidence in Pakistan is decreasing and aid inflows into Pakistan can be expected to fall in the medium term.

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