News analysis: Pakistan in for 'roller coaster' ride after parties strike deal

• PPP will review decisions on a case-by-case basis.
• "It will be, of course, a roller coaster," says expert.
• PPP and PML-N strike deal to form government.

The deal between two parties to form a coalition government will be based on conditional support from one of them, the Pakistan People's Party (PPP), that will review decisions on a case-by-case basis, a top PPP official said on Wednesday.

Such an arrangement could make life difficult for the government, which needs to make tough decisions to steer the country out of financial crisis facing a strong opposition bloc led by supporters of jailed former prime minister Imran Khan.

"It will be, of course, a roller coaster," said political commentator and author Ayesha Siddiqa of the road ahead for the next government.

The agreement between Bilawal Bhutto Zardari's PPP and the Pakistan Muslim League-Nawaz (PML-N) of three-time Premier Nawaz Sharif late Tuesday night ended days of uncertainty and negotiations after an inconclusive February 8 election.

But the PPP is not taking cabinet positions, its secretary of information, Faisal Karim Kundi, told Reuters, and its support in parliament would depend on the party's stance.

"We will support policy decisions on an issue-to-issue basis," Kundi said, adding that PPP would vote for the PML-N's prime minister candidate, Shehbaz Sharif, younger brother of party chief Nawaz Sharif.

The most challenging task is to agree on critical fiscal tightening conditions under a new International Monetary Fund (IMF) programme.

The current IMF programme expires in March.

Other big moves include privatisation of loss-making state-owned enterprises such as the flagship carrier Pakistan International Airlines (PIA).

Kundi said the PPP would not support the privatisation of the airline, while the PML-N would want to fast-track it.

In return for supporting the formation of government by PML-N, PPP will seek the offices of president, chairman of the upper house of the parliament, and governors in two of the four provinces, he said.

PML-N President Rana Sanaullah told Geo News' Shahzeb Khanzada that both parties had decided to form a coalition government and everyone would have the right to criticise if they do not perform.

He noted that his party would make decisions for Pakistan's betterment and if they do not, the the country could see a sovereign default.

Markets on Wednesday reacted positively to the news of an alliance, which removed days of uncertainty. Benchmark share index KSE rose 1.81%.

The index had fallen more than 5% since the elections.

Pakistan bonds recovered after three straight days of falls. The December 2027 bond was the biggest gainer, rising 2.58 cents, closely followed by the April 2031 bond, which rose 2.54 cents.

PML-N's 79 and the PPP's 54 seats together make a simple majority in parliament to form a government, which, however, will also rope in smaller parties in the coalition.

Candidates backed by Imran Khan won 93 seats, but do not have the numbers to form a government. He and his party have rejected the results of the elections, alleging widespread rigging.

Power-sharing formula

According to sources, the PPP will not become part of Shehbaz Sharif's cabinet at any stage but will get top constitutional offices including the presidency.

The party will also not take any portfolio in the Punjab cabinet.

What will PPP get?

• Presidency
• Senate chairman
• Punjab governor
• KP governor
• Balochistan chief minister
• Deputy speaker National Assembly

On the other hand, the PML-N will get the PPP's support in forming governments in the Centre and Punjab. Nawaz Sharif's party will also vote for the PPP's nominee for the Balochistan CM office.

What will PML-N get?

• PM Office
• Punjab CM
• Speaker National Assembly
• Will get to nominate governors for Sindh and Balochistan