Former Pakistan PM Imran Khan’s Arrest: Currency Falls to Record Low, Stock Market Crashes

Former Pakistan Prime Minister Imran Khan was arrested on Tuesday afternoon while he was appearing in a corruption case at the Islamabad High Court. The Court ruled that the arrest of Mr. Khan in the corruption case was valid. The former PM’s political outfit, Pakistan Tehreek-e-Insaaf (PTI) has appealed in the Supreme Court on Wednesday challenging the HC decision. Mr. Imran Khan has been lodged at Islamabad Police headquarters, which has been converted into a temporary court for further hearing in view of the prevailing law & order situation. Imran Khan was ousted as PM in April 2022 after he was defeated in a no-confidence motion in Pakistan’s National Assembly. The corruption case is one of more than 100 registered against the former Pak PM since his ouster after four years in power. In most cases, Mr. Khan faces being barred from holding public office if convicted, with general elections scheduled to be held later this year in November. The arrest has triggered mass protests by mobs which has thrown life out of gear in all major cities & towns across Pakistan.

Law & Order Situation

PTI gave a countrywide general shutdown call on Wednesday, while its leaders have appealed to party workers to remain peaceful. Authorities in three of Pakistan's four provinces have imposed an emergency order banning all gatherings as PTI supporters marched to the capital to protest the arrest of their leader. The army has been deployed in violence-hit Punjab province as incidents of violence and arson continued on Wednesday. The mobile internet has been suspended indefinitely in Pakistan on directions from the country’s Interior Ministry. Schools & colleges across Pakistan have been ordered to remain to prevent any untoward incident. Four people were killed and over a dozen others sustained injuries in violent clashes between law enforcement agencies and protesting mobs across the country on Tuesday. The angry protesters torched some vehicles of the security forces and damaged government properties.

Impact on Business

Tuesday’s violence and subsequent calls for nationwide shutdown brings more disturbing news for the already dwindling Pakistan economy. The South Asian nation is going through its worst economic crisis in decades, with a record inflation at 40% leading to skyrocketing prices of essential commodities. On Wednesday, the Pakistan Stock Exchange (PSX) was down by 135 points during early hours of trading. The Karachi Stock Exchange benchmark KSE-100 index was at 41,238.47 from Tuesday’s close of 41,373.81. The Pakistani rupee weakened 1.3% to a new record low of 288.5 against the U.S. dollar on Wednesday. The currency has once again come under pressure against the US dollar amid further delays in the revival of the International Monetary Fund (IMF) loan program. An International Monetary Fund bailout package has been delayed for months even as foreign exchange reserves at $4.4 billion are barely enough to cover a month's imports. PTI’s call for a nationwide shutdown threatens the struggling manufacturing sector in Pakistan hit by record high interest rates at 21%. Users have also reported disruption of digital payment services, and no access to online apps, social media platforms as internet remains suspended.

International Reaction

The United States has called for respect of democratic principles and the rule of law in Pakistan in the aftermath of the arrest of its former Prime Minister Imran Khan. White House Press Secretary Karine Jean-Pierre told reporters that the Biden Administration was aware of the arrest of former Pakistani Prime Minister and the United States does not have a position on one political candidate or party versus another. During a joint presser with his British counterpart, U.S. Secretary of State Antony Blinken said,’ We just want to make sure that whatever happens in Pakistan is consistent with the rule of law, with the constitution.’ Britain’s Foreign Secretary James Cleverly told journalists that the UK has a long standing and close relationship with Pakistan. He further said that Pakistan is a Commonwealth partner, and the UK wants to see peaceful democracy and rule of law adhered to in the South Asian nation. The European Union spokesperson in a statement said that in such difficult and tense times, restraint and cool headedness are needed. Pakistan's challenges can only be addressed, and its pathway can only be determined by Pakistanis themselves, through sincere dialogue and in line with the rule of law, the statement read.