Dar meets adversary to bridge trust deficit

Pasha says his think tank will coordinate with finance ministry in future

ISLAMABAD:

Amid strong criticism of alleged manipulation of figures to show a good health of economy, Finance Minister Ishaq Dar met his adversary, former finance minister Dr Hafiz Pasha, to mend fences.

Both had a luncheon meeting last week to bridge the trust deficit, said sources in the Ministry of Finance. Pasha also confirmed that he met the finance minister on his request.

This marked a shift in Dar’s approach in dealings with his former senior party colleague. They had both served in the 1997 cabinet of Prime Minister Nawaz Sharif.

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Dar has never hidden his differences with Pasha, who is considered one of the top economists and has earned international recognition. The minister publicly called Pasha a “pseudo-intellectual” when the latter challenged his policies on the currency exchange rate and budget deficit control.

After the meeting, officials from the Ministry of Finance, Federal Board of Revenue and Pakistan Bureau of Statistics (PBS) also met Pasha, sources said.

The government has come in for a lot of criticism following claims of early economic recovery, which was not supported by data gathered by independent economists.

The trio of Pasha, who heads the Institute for Policy Reforms (IPR), former State Bank of Pakistan governor Shahid Kardar and former economic adviser to the Ministry of Finance Dr Ashfaque Hasan Khan has exposed the alleged manipulation of statistics.

This also compelled the International Monetary Fund (IMF) to revalidate the numbers of last fiscal year. The talk of figure fudging has also undermined the lender’s credibility that has been giving certificates of good economic health every quarter.

Pasha had challenged the government’s claim of achieving over 4% gross domestic product (GDP) growth in fiscal years 2013-14 and 2014-15, proving with statistics that actual growth each year was not more than 3.5%.

Similarly, he along with independent economists confronted the claim of reduction in budget deficit to 5.3% of GDP in the last fiscal year. They said actual deficit, excluding circular debt, stood at 6.4%.

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In an article published in the London-based Financial Times, Pasha stated, “In our close to 70-year history, we’ve never had a government that fudged statistics to the extent of this one.”

Sources in the Ministry of Finance claimed that Pasha accepted the government’s position on fiscal deficit and GDP growth.

However, he denied that he accepted the government’s explanation. “My views on budget deficit and GDP growth are unchanged as I have not been given any satisfactory explanation,” he said while talking to The Express Tribune.

Pasha said the government team also could not explain the reasons behind a huge statistical discrepancy of Rs177 billion. They could also not give satisfactory answers to booking the Rs102 billion privatisation proceeds of Habib Bank Limited as non-tax revenues. Historically, the proceeds are treated as a financing item.

According to Pasha, the only understating with the government was that in future his think tank, the IPR, would coordinate with the Ministry of Finance and the PBS.

He denied that Dar had asked him to join the government. “I have played my innings and will not join the government in any position,” he remarked.

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Dar is considered the most active cabinet minister who is not only doing his job but is also assisting the prime minister in political and foreign affairs. To lessen his workload, the premier has appointed two assistants - Haroon Akhtar Khan as special assistant to the prime minister on revenue and Barrister Zafarullah Khan as special assistant to the PM on economic affairs.

Published in The Express Tribune, September 22^nd, 2015.

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