After elections, debt crisis looms in Pakistan

Global economic conditions have exacerbated the problems, as rising oil prices and declining remittance flows into the country have led ratings agencies to downgrade Pakistan’s outlook to “negative.”

Another challenge is rising Pakistani imports for China–Pakistan Economic Corridor (CPEC) infrastructure projects. Chinese soft loans are supposed to stimulate private investment, industrial production and export growth, but these have not materialized, and investors worry about corruption, taxation, political instability and bureaucratic red tape.

While the military has been the guardian of the Pakistani state, it lacks the tools or training to effectively steer the economy, leaving the job up to civilians, whether technocrats or politicians.

Pakistan is likely to follow its past playbook and turn to Saudi Arabia, the IMF or China for cash — but each would come with strings attached. Saudi Arabia could demand military support in Yemen; the IMF could require significant economic reforms, with the U.S. seeking greater Pakistani pressure on the Taliban; and China might insist on equity swaps in exchange for stabilization loans or debt restructuring.

What to watch: After the electoral dust settles, various states will likely continue jockeying for opportunities in Pakistan's unsteady economy.

Sameer Lalwani is senior fellow for Asia strategy and South Asia Program co-director at the Stimson Center.