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Topline Flash Note: Pakistan Politics: Govt. party (PTI) ahead in Gilgit-Baltistan elections; Neutral to Positive for the market

• The election for Gilgit-Baltistan (GB) Assembly in 23 constituencies were held yesterday with 1 remaining to be held later.
• GB, formerly known as the Northern Areas, is a region administered by Pakistan as an administrative territory. It is the gateway of the China-Pakistan Economic Corridor (CPEC). It is not part of the NFC award and the government provides Grant-in-Aid to the region. The government has budgeted Rs32bn for FY21 and an additional Rs25bn under Public Sector Development Program (PSDBP) to the region.
• The Prime Minister has also recently granted provisional provincial status to GB. The other political parties have also promised to make GB a full province.
• The GB Assembly comprises of 33 seats. Of these, 24 are elected by popular vote, six are reserved for women and three for technocrats and professionals. The reserved seats are given to parties in proportion to the number of elected seats won.
• Some 330 candidates contested the polls, which were the third since the scenic region was granted the right to elect its own assembly in 2009.
• The first two elections were won by the PPP in 2009 and PML-N in 2015, respectively. Both were the incumbent federal governments at the time.  
• As per the latest election update, PTI is leading in 8 constituencies (6 confirmed) with Independents ahead in 6, PPP in 5, PML-N in 2, MWM (pre-election ally of PTI) in 1 and JUI-F in 1 (source: GEO).
• We expect PTI to form government in GB with Independents and MWM, where a total of 13 seats are necessary.
• From market’s vantage point, we believe the election’s outcome is Neutral to Positive as the sitting federal government will manage to form the government.
• However, PTI was unable to sweep the elections like PPP and PML-N did in the last two elections.

Once GB get the full provincial status, it will have a seat in the Council of Common Interest (CCI). This would mean PTI will have governments in three provinces out of five.