Politicians tend to avoid hard economic decisions. If and when the push comes to shove, they recruit a professional with no political clout, or are forced to accept a gift from the establishment. As soon as the job is done, or the need obviates, the person is shown the door. I have always argued that the finance minister should be a political being, preferably with good standing in the ruling party. Nothing much can be done for sustained economic change without political ownership. In 1998, for instance, Pakistan faced sanctions following the nuclear tests. Asian financial crisis was also in full swing. All the problems that we have to this day were there. Investment and aid inflows had dried up. The rupee was losing value rapidly. Foreign exchange reserves were less than the monthly debt servicing. Inflation was in double-digit. In this situation, Hafiz Pasha was appointed prime minister’s adviser on finance. He began negotiating with the IMF. Ishaq Dar, then commerce minister, kept on issuing statements prejudicing the position of Pasha. He made no secret of his interference in the affairs of the finance ministry, saying he had the blessings of the prime minister who held the finance portfolio. Eventually, Hafiz tendered resignation and Dar became finance minister for the first time.
Is Dar now doing the same to MIftah Ismail, and again with the blessings of the supreme leader of the PML-N? Negotiating deals abroad to help overcome serious crises requires that the country is represented by a leader and team enjoying full confidence of the ruling political party. Now Miftah has his problems. For a finance minister, he speaks too much. He is casual when he ought to be serious. His sense of humour is mostly out of place. All this cannot hide the fact that he has successfully pushed through the system some of the most difficult decisions ever. He is professionally trained in finance and is a practising businessperson. Above all, he is a professional who has now also learned the art of the possible i.e. politics. He is a party member of some standing and has attended the best available political training institute – jail. A party has the right to change its ministers, but the wisdom of doing so in the midst of an economic crisis will be questioned.
It is appropriate here to recall the sad story of Asad Umar of the PTI. A business management professional who also had by then been through regular electoral politics, Asad had been declared the future finance minister well before his party assumed power. It was a right move showing preparedness for the job. Once sworn in, he was confronted with the question every new government in Pakistan faces: to go to IMF or not. His leader’s known position was against it. Asad began interacting with the IMF while making assessment of the economy to see whether the programme could be avoided. Though not great, economic indicators were not as bad as today. However, somewhere along the line, Imran Khan was persuaded by the establishment and Asad’s detractors in the party that the IMF was the only option. Asad’s negotiating position was weakened by mixed signals from his own party. By posturing that the deal was not absolutely essential, he was moving towards an IMF deal much better than the one signed later by the usual technocratic suspects.
There is a lesson here for the present coalition government. Let the Miftah-Ayesha-Yaqoob team continue. It has the professional capacity and political understanding of the requirements of the economic stabilisation job.
Published in The Express Tribune, July 8th, 2022.
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