(Bloomberg) -- Pakistan’s financial markets may remain under pressure as the formation of a new government faces a delay with the two main political parties bickering on who would become prime minister.

The inconclusive results, where no party won an outright majority, will be viewed as market negative, according to Citigroup Inc. Pakistan’s two main family-controlled political parties are in talks to form a new government including who could be the prime minister candidate. Investors are already dumping the nation’s stocks, with the benchmark index slumping 6% in the past three days. 

Citi’s base case has been a multi-party coalition backed by the military but the coalition government may now be less stable.

“Beyond risks to political stability, negotiating a new International Monetary Fund program and implementing austerity policies will be more challenging in a more politically divided environment with a stronger opposition,” Johanna Chua, Hong Kong-based head of emerging-markets economics, wrote in a Feb. 12 note. 

The nation’s $3 billion IMF program is set to end in March and investors are waiting for a new government to announce its fiscal goals and plans for another bailout. Pakistan faces $25 billion of external debt payments in the fiscal year starting July, about three times its foreign-exchange reserves.

Read: Pakistan Parties’ Coalition Talks Hit Snag Over Who Becomes PM

“If establishment parties fail to form a pact, a protracted crisis would put more downside pressure on Pakistani assets,” John Ashbourne, emerging-market economist at BMI in London, wrote in a note.

The rupee has been stable after the elections, while most dollar bonds have slowly recovered after Friday’s selloff. Citigroup expects a new government to be in place by late February to early March. 

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