Pakistan Parties' Coalition Talks Hit Snag Over Who Becomes PM

(Bloomberg) -- Pakistan’s two main family-controlled political parties hit a snag in their talks to form a new government, as they can’t agree who would become prime minister in their coalition designed to thwart jailed ex-leader Imran Khan.

The Sharif and Bhutto clans both want their candidates to take the top job, local media reported Monday. Sherry Rehman, a senior leader of Bilawal Bhutto Zardari’s Pakistan Peoples Party, said it will form committees to “negotiate with other political parties.”

The development suggests it could take weeks for a government to be formed. The day before, Pakistan Muslim League-Nawaz President Shehbaz Sharif said on X that the clans had “agreed in principle to save the country from political instability.”

The Sharifs and Bhuttos have been negotiating to form a government after Imran Khan’s candidates, running as independents, defied the odds by taking the most seats in the election but fell short of an outright majority. Bhutto Zardari’s PPP had two meetings with three-time premier Nawaz Sharif’s PML-N over the weekend. 

Details of the discussions weren’t made public, but local media reported that PML-N wants either Nawaz or his brother, Shehbaz, to lead the government. PPP, which came third in the vote, would like Bhutto Zardari, 35, the son of assassinated former premier Benazir Bhutto, to be prime minister, saying he would be a fresh face in a country where more than 60% of the population are under 30.

Any coalition between the parties would thwart Khan’s candidates, whose strong showing highlighted the former cricket star’s enduring popularity and voters’ disillusionment with the status quo in Pakistan’s politics, represented by the Sharif and Bhutto parties and the powerful military. Khan’s party has alleged vote-rigging in the election and there have been scattered protests across the country.

For investors, any delay in forming a government would lead to further uncertainty for an economy facing challenges on several fronts. Inflation is running at 28%, the fastest pace in Asia, making it difficult for people to make ends meet. A nine-month bailout program with the International Monetary Fund, Pakistan’s 23rd since independence in 1947, expires in March, suggesting any new leader will have to negotiate a new deal.

Pakistan’s benchmark stock index fell 2.8% Monday after dropping 1.8% on Friday. 

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