The accountant is not accountable

Dar, on getting legal respite in Pakistan, dashed from London to head the Ministry of Finance with misplaced optimism


Haroon Rashid Siddiqi January 24, 2023
The writer is a retired professional based in Canada

Ishaq Dar, on getting legal respite in Pakistan, dashed from London to head the Ministry of Finance with misplaced optimism. Dar smeared the image of his predecessor, Miftah Ismail, for leaving the dollar exchange rate floating and adding to hyper-inflation. Miftah, an economist, was on the right track and faced the brunt of taking unpopular decisions to avert the impending default. Dar unwittingly picked up the gauntlet against his colleague and got him ousted unceremoniously.

The chartered accountant dismissed the balance sheet. He visualised that by keeping the interbank rate of the dollar under his ministerial control, he would take Pakistan out of the woods. Least did Dar realise that by impeding the higher value of the dollar against our sliding rupee through artificial means would backfire and create an economic chaos that would shatter his ambitious plan.

Dar vented his frustration when he used intemperate language against the IMF on not getting friendly responses from there. He had no clue to the paradigm shift in the geopolitical realities of the world. The new economic order was outlandish to him. Dar’s previous stint as FM in 2013 onwards when he had managed to reign in the dollar between Rs100-110 was a story of the past.

Primarily our recent economic meltdown is not a natural outcome of any intractable economic cycle but a manufactured crisis of bad economic policies and inept governance thriving on corruption.

Our ruling elite got hooked on running the country on borrowed money from multilateral agencies, grants and aid from the developed nations, commercial loans from international financial institutions and raising funds by floating high yielding bonds internationally. Now the world has changed, and more so for Pakistan. All usual avenues of collecting dollars have dried up because everyone knows that our repaying capacity does not exist anymore.

The single most important factor of production for Pakistan is now the missing dollar in our theory of production. We, therefore, cannot create our own wealth and thus are constrained to pestering the resourceful countries with our begging bowl, seeking alms in the name of natural calamities engendered by the West.

We fail to increase and diversify our exports and blindly continue our import-based economy despite having a paltry reserve of foreign exchange. Consequently, 5,700 containers are held up at the Karachi port as LCs are not being processed by commercial banks on SBP’s directives.

Look at our model of business: we have been allowing the automobile sector to continue manufacturing their vehicles by importing the components since ages. This criminal and wasteful outflow of our foreign exchange goes on unabated while the Ministry of Commerce has done nothing about the technology transfer. You would not hear politicians talk about this criminal drain of foreign exchange as there are plenty of such outfits operating in our economy under the patronage of the ruling elite.

Similarly, it was a huge blunder when Pakistan entered into a free trade agreement with China probably in 2006. Our unstable and matchless economy suffered another setback in 2015 when a 45 billion dollar CPEC was signed with China that was ill-conceived, lopsided and haphazardly executed by our unimaginative politicians with vested interests. The power projects agreements signed under CPEC and the resultant scourge of ever-increasing circular debt is one manifestation of our failure to plan and predict, leaving the corruption aside.

Finally, what is the way out of this existential threat. We should first build forex reserves for at least a couple of years by begging, borrowing or stealing at which we are so unashamedly and deftly trained. We must also sell some of our good assets within and outside Pakistan. This would be desirable if the proceeds were put to alter the course of economy in the right direction leading to sustainable growth. We could also consider giving Kartarpur Corridor on lease to our Sikh brethren for say 5 to 10 years against some meaningful advance payment in USD. There are a plenty of out-of-the-box solutions but vision, will and wisdom are required to rescue the sinking ship from turbulent waters.

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