In all probability, veteran politician Senator Ishaq Dar is likely to become the country’s next finance minister. He will be burdened with the task of fixing the teetering economy, amid hopes that he will refrain from hurting business sentiments through politically-motivated statements.
If appointed, Senator Dar, a two-time former finance minister, faces immediate challenges. He has to present next year’s budget in the shortest possible timeframe, while finding a solution to the looming threat of a national default on international payments due to external debt amortisation.
The options in front of him dictate that either he go straight to the negotiating table for a bailout package from the International Monetary Fund (IMF), or bet on timely help from friendly countries. However, analysts say that relying on friendly countries may not be immediately possible.
Senator Dar was appointed Leader of the Opposition in the Senate of Pakistan on March 14, 2012. He has also served as finance and commerce minister in the past. His first tenure as finance minister was under Nawaz Sharif, and he was appointed to the office again for a short stint under former prime minister Syed Yousaf Raza Gilani in 2008.
Dar achieved his certification in chartered accountancy from the Institute of Chartered Accountants in England and Wales, and was one of the youngest Pakistanis at the time to have passed the professional qualification in the minimum time period. Senator Dar is now a Fellow Chartered Accountant.
In 2008, when Dar was appointed finance minister under Gilani, he presented an extremely bleak picture of the economy which, according to many, had shattered investor sentiment when it was in dire need of diligent rebuilding. Senator Dar had stated in 2008 that the budget deficit would become bigger than 9% of the Gross Domestic Product that year. The announcement shattered the confidence of the business community and foreign investors, who had been hoping to invest in Pakistan in hopes of some stability following a decade of dictatorship. This caused the rupee to plummet and there was a run on the banks.
Former finance ministry officials, however, claim the establishment had actively misled Senator Dar. They say bureaucrats had deliberately painted a sorry picture by taking into account the coming year’s liabilities by applying the accrued accounting model, but took revenues only for that year by applying the cash-based accounting method.
Analysts say Senator Dar must countercheck the facts presented to him by bureaucrats this time around before making them public. There are chances that the bureaucrats may repeat the same episode in a bid to remain in the good books of the government by throwing responsibility on the previous government.
Another allegation against Senator Dar is that he stopped the issuance of Global Depository Receipts (GDRs) of some entities as finance minister in 2008. These had been planned to raise $4 billion from international markets. They included the GDRs of National Bank of Pakistan, Kot Addu Power Company, the sale of 15% shares of Habib Bank and 10% exchangeable bonds of the Oil and Gas Development Company.
The stoppage had led to panic in the market and forced the government to discuss a bailout package with the IMF later on.
However, according to former finance ministry officials, President Zardari had been calling the shots behind the scenes, and had stopped Dar from moving forward on the issue. Former adviser to the finance ministry Dr Ashfaque Hasan Khan, who was serving in the finance ministry at that time, said Senator Dar had been all for the transaction.
Ahsan Iqbal, who was the deputy chairman of the Planning Commission in the 1997 setup, is also tipped to be handed the same post with the status of a federal minister. The Gilani government had abolished the Ministry of Planning and Development, and Nawaz Sharif may revive this ministry.
Following the elections, Standard & Poor’s Ratings Services termed them a key achievement for Pakistan’s maturing democracy in the face of general economic malaise, widespread and incessant sectarian and political violence, large-scale domestic insurgencies, and on-going tension with neighbouring India. S&P said the election outcome puts the incoming government in good stead to seal a deal with the IMF soon.
Published in The Express Tribune, May 14th, 2013.
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