World Courant
Islamabad, Pakistan – When Pakistan’s new cupboard was sworn in on March 11, one man stood out: Muhammad Aurangzeb, a political outsider tasked with steering the nation out of its financial woes.
Aurangzeb, a veteran banker who beforehand headed one in all Pakistan’s largest industrial banks, Habib Financial institution Restricted (HBL), has taken the reins of a $350 billion economic system, over a number of different contenders, together with the four-time minister of Finance Ishaq Dar.
Aurangzeb graduated from the College of Pennsylvania’s Wharton College of Enterprise and in addition labored at main worldwide banks equivalent to Citibank and JP Morgan earlier than his six-year stint at HBL.
Aurangzeb, who had twin citizenship, had to surrender his Dutch nationality with a purpose to maintain public workplace in Pakistan. Though he isn’t but a member of parliament, he has six months underneath the nation’s guidelines to turn into a parliamentarian so he can proceed as a federal minister.
Mr. Muhammad Aurangzeb right now formally took over the accountability because the Finance Minister of Pakistan after taking oath as President. pic.twitter.com/RSBhulbLwl
— Ministry of Finance, Authorities of Pakistan (@Financegovpk) March 11, 2024
Aurangzeb shouldn’t be the primary banker to turn into Pakistan’s finance minister. Earlier than him, Shaukat Aziz held the place for eight years (1999-2007) underneath Basic Pervez Musharraf’s tenure earlier than turning into Prime Minister.
Later, underneath the federal government of former Prime Minister Imran Khan and his Pakistan Tehreek-e-Insaf (PTI), banker Shaukat Tarin was given the portfolio which he held for a yr (2021-2022) earlier than the PTI authorities was ousted by a parliamentary assembly. movement of no confidence in April 2022.
Aurangzeb’s appointment comes at a important time when the nation is dealing with critical financial challenges as he works with Prime Minister Shehbaz Sharif and the Pakistan Muslim League-Nawaz (PMLN) authorities. Sharif and his PMLN got here to energy after forming a coalition authorities following the latest February 8 elections, which had been marred by allegations of widespread rigging.
Certainly one of Aurangzeb’s first duties, analysts say, will probably be to urgently negotiate a brand new Worldwide Financial Fund (IMF) lending program after the present nine-month, $3 billion deal expires in April.
A brand new lending program with the worldwide lender is important for the nation at the moment burdened by an exterior debt burden of greater than $130 billion – at the very least a 3rd of its gross home product. Pakistan was as a result of repay $24 billion in June this yr, however managed to safe some aid from bilateral collectors by rollovers. The nation now should pay nearly $5 billion earlier than the tip of the fiscal yr in June.
In the meantime, Pakistan’s present forex reserves stand at a paltry $7.8 billion, sufficient to cowl about eight weeks of imports.
The forex has been devalued by greater than 50 p.c previously two years, whereas inflation, at the moment over 23 p.c, is anticipated to rise to nearly 40 p.c in 2023, with a speedy improve in power charges and the worth of fundamental meals objects. .
Inflation in Pakistan reached a report excessive of virtually 40 p.c final yr. (Sjahzaib Akber/EPA)
Many observers consider that Aurangzeb’s expertise with international banks and publicity to worldwide monetary markets is essential given Pakistan’s debt issues.
Sajid Amin Javed, a senior economist on the Sustainable Growth Coverage Institute in Islamabad (SDPI), stated Aurangzeb’s appointment is a sign from the federal government that it’s dedicated to implementing financial reforms – even when they’re politically unpopular.
“Partially, this will even be a step to blunt the notion that the PDM authorities was unable to ship previously,” he instructed Al Jazeera, referring to a coalition that Sharif led briefly after ousting the federal government of Imran Khan, and whose quick tenure coincided with skyrocketing inflation and rising financial battle for Pakistanis.
However Aurangzeb will want extra than simply his background to reach his job, urged Karachi-based economist Khurram Schehzad.
“The important thing level shouldn’t be essentially who the finance minister is, however somewhat what that individual would do, what his imaginative and prescient is and what long-term pondering he brings to the desk,” Schehzad instructed Al Jazeera.
Islamabad-based SDPI’s Javed says these are difficult instances for any finance minister, however Aurangzeb’s lack of political baggage might work in his favor.
“We may even see a extra reform-oriented partnership with the IMF somewhat than a political stability,” Javed stated, referring to strain from voter lobbies in opposition to reforms that conventional politicians usually battle with. Most significantly, he brings new insights into financial coverage. Given his international expertise, he might be able to go somewhat deeper into financial coverage assessment and the nation might see a renewed concentrate on financial progress.”
Karachi-based economist Ammar Habib Khan acknowledged Aurangzeb’s expertise in finance however instructed Al Jazeera {that a} macroeconomist could be higher suited to the job than a banker.
“Normally, these on the helm (of presidency) are unable to know the lengthy lead time related to reforms, and the macroeconomic stability that should be achieved,” he stated. “They go for a fast resolution, primarily involving individuals who can apply band-aids, as an alternative of implementing long-term reforms.”
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