Billionaire club dominates reconstituted EAC

ISLAMABAD:

Prime Minister Shehbaz Sharif has picked his key aides and members of the country’s billionaire club as members of the Economic Advisory Council to change the economic direction and end protectionist policies – an objective that may make many new members of the body uncomfortable with.

The 22-member body having representation of the government and the private sector also has at least three members of former prime minister Imran Khan’s Economic Advisory Council, according to a notification issued by the Ministry of Finance on Thursday.

The prime minister will chair the EAC, which is initially planned to meet every week. Among the members are former prime minister Shahid Khaqan Abbasi, Planning Minister Ahsan Iqbal, Finance Minister Miftah Ismail, former finance minister Saleem Mandviwalla, Information Minister Marriyum Aurangzeb, Minister of State for Finance Ayesha Ghous Pasha and Minister of State for Petroleum Mussadiq Malik.

Pakistani billionaires have also been included in the EAC. Among prominent ones are one of the richest men, Mian Monammad Mansha and his nephew Shahzad Salim. Mohammad Ali Tabba –the owner of the Lucky Cement, has also been made part of the new EAC. He also served in the Imran Khan’s EAC.

Arif Habib, another billionaire industrialist has also been retained in Shehbaz Sharif’s EAC. Ijaz Nabi -- an economist, has secured the seat in the new EAC. Nabi had also remained part of the previous government’s economic advisory bodies and was among those who supported reducing fuel prices, which eventually led to the derailment of the IMF programme.

Former FBR chairman Tariq Pasha, former petroleum minister Dr Asim Hussain, banker Atif Bajwa, Faisal Farid – Maxim International Limited; HBL President Aurangzeb Khan, Fauji Foundation Managing Director Waqar Ahmad Malik, senior partner of advisory firm McKinney and Company Salman Ahmed, Fatima Group’s Rahman Naseem and Chairman of the Interloop Group Musadaq Zulqarnain are other members of the EAC.

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One of the biggest challenges for Prime Minister Shehbaz Sharif will be to avoid conflict of interest of the EAC members while making policy decisions. The majority of the EAC members are those who have prospered in business due to the protectionist policies and the government’s dole-outs in the shape of subsidies.

Interestingly, one of the terms of reference of the EAC will be to analyse the effectiveness of subsidies, protection and other financial support by the government to state-owned enterprises (SoEs) and other vital sectors of the economy in the context of overall cost and benefit analysis of such subsidies and protection.

Most of the new EAC members are the beneficiary of the state’s protectionist policies and subsidies. The International Monetary Fund had set a condition to end the export refinance facilities being funded by the central bank. It has proposed that any such scheme should be funded by the federal government on a need basis.

The EAC has been established to review and formulate economic policies in a more holistic manner, according to the Ministry of Finance. The EAC will advise on short-term macroeconomic stabilisation as well as structural reforms for stable and sustained economic progress, according to the notification.

Pakistan is in the IMF programme and its economic policies are guided by the Memorandum of Economic and Financial Policies, signed by the country’s Finance Minister and the Governor of the central bank.

Historically, the EAC has never remained an effective forum for serious policy making and the platform is often used for forwarding personal agendas by the members. The new EAC needs to reverse this trend by putting behind their personal business interests.
The bankers, too, are exploiting the government by offering them loans at rates never seen in 20 years –thanks to the wrong decision of completely banning government borrowing from the central bank and a complacent State Bank of Pakistan. The Ministry of Finance’s debt office too remains weak and has not been able to stand against exploitation by the banks.

According to the notification, the Economic Advisory Council will review the overall economic condition of the country and propose possible corrective measures considering available resources of the country.

It will review the existing market imperfections in the various important sectors of the economy in order to promote competition by correcting the market distortions.

The EAC will advise the government ministries, organizations, bodies and various project implementing agencies in formulating evidence-based policies. It will also help in finding the technical expertise and human resource that may be required to carry out the requisite financial and economic analysis/studies.