(Bloomberg) -- A Pakistan top court has decided to hand two dozen seats from this year’s elections to Prime Minister Shehbaz Sharif’s rivals, undermining the government’s ability to pass through legislation in parliament for reforms.
The country’s supreme court handed 24 seats set aside for women and minorities, which were earlier given to the ruling alliance, to Imran Khan’s supporters that makes them a powerful block in the National Assembly, or parliament’s lower house. The legislators had contested the Feb. 8 national election as independents after Khan’s party, Pakistan Tehreek-e-Insaf, was barred from contesting over past irregularities.
The legislators are part of the Sunni Ittehad Council, a religious group sanctioned by Khan after the election to get access to reserve seats. The group currently holds 84 seats in 336-member parliament. As a consequence of the verdict, the ruling alliance - which is set to lose 24 reserved seats - will weaken.
The key stock index extended decline to as much as 1.8% before paring losses to 0.5% at 3pm local time.
“The government losing seats in the National Assembly would cause uncertainty in the market,” Adnan Sami Sheikh, an analyst at Pakistan Kuwait Investment Co., said in Karachi
The verdict could complicate the passage of key, government-backed legislation as it continues negotiations with the International Monetary Fund for a new loan package. Currently, the ruling coalition has 209 members in the house and the court’s decision means it will remain shy of the two-thirds majority required to amend the constitution in order to pass critical legislation.
“Though a setback for government allies, there is no immediate threat to this coalition government,” said Memoona Tanveer, head of corporate and high net worth individuals at Dawood Equities Ltd. The market can be negative for a few sessions but it will recover, said Tanveer.
Even though the Supreme Court’s verdict strengthens Khan’s hand, he himself continues to languish in prison, and faces about 200 cases stemming from his time in office and after he was removed from power in 2022 by a parliamentary vote. Khan denies all allegations and accuses the country’s powerful military and the US of orchestrating his ouster - a charge denied by both.
(Updates with market movement)
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