In cash-strapped Pakistan, who will be the finance minister?

Islamabad: Pakistan’s political impasse may end with the formation of a coalition government but its economic worries may linger on primarily due to the dilemma of the Pakistan Muslim League-Nawaz party over the appointment of the finance minister of the cash-strapped country.

In January, the cash-strapped country received over USD 700 million second tranche from the Washington-based global lender under the existing USD 3 billion SBA agreed towards June last year when Pakistan was slowly drifting towards default.

Earlier this week, US-based Fitch Ratings — one of three leading global rating agencies — said in its report that a new International Monetary Fund (IMF) deal to succeed the Stand-By Arrangement (SBA), expiring in March this year, was key to Pakistan's credit profile.

Pakistan has not completed the last USD 6.5 billion IMF bailout package, and therefore, the first task of the new finance minister will be to sit with the Washington-based global lender to get the last loan tranche of USD 1.2 billion.

He or she would also need to kick-start negotiations for a new long-term deal.

Almost two weeks after the February 8 general elections that delivered a fractured mandate, there was a breakthrough late on Tuesday night that could end the political impasse in the country. The PML-N and the Pakistan Peoples Party (PPP) have agreed on a power-sharing deal to form a new coalition government with the Nawaz Sharif-led party being the dominant partner.

It is here at one of the most critical economic junctures that the Pakistan Muslim League-Nawaz (PML-N) faces a hard decision between appointing a highly experienced, former banker Ishaq Dar as the finance minister and bringing in a new face out of political compulsions, according to The Express Tribune newspaper.

The PML-N has not groomed second-tier economic leadership, and without Dar, it might end up relying on technocrats as was done by the Pakistan People’s Party (PPP) or by the former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) led governments.

“Any inexperienced appointee might find it difficult to sit across the table and negotiate a deal that strikes a balance between economic stabilisation and people’s growing miseries but bringing in a banker as a finance minister might raise questions about conflicts of interest,” the newspaper commented.

The PPP has publicly opposed Dar’s candidacy, but its opposition does not carry weight until the party formally joins the next cabinet.

However, the final decision would be made by former Prime Minister and PML-N supremo Nawaz Sharif, who has not yet shared his thoughts about his choice for the position.

Sources in the PML-N told the newspaper that the party is also exploring other options, including considering the names of two bankers but no names have been finalised.

A strong camp in the PML-N is not in favour of appointing Dar to the post for the fifth time, sources said, adding, “However, his name cannot be ruled out until Sharif shares his thoughts.” Dar has served as finance minister four times and earned the reputation of a ‘tough negotiator’ with the IMF. His relations with the IMF are now one of the reasons for the reconsideration of his appointment.

But the dichotomy is that on the one hand, Dar has been credited “with completing the 2013-16 IMF programme” but on the other, “Pakistan could not successfully complete the last USD 6.5 billion bailout package, and the blame has been placed squarely on Dar for his handling of the programme,” the report said.

In his speech at the Senate Standing Committee on Finance on June 16, 2023, the former finance minister said that geopolitics was behind the stalled loan programme, as global institutions wanted Pakistan to default like Sri Lanka and enter negotiations.

The IMF has publicly denied this, while behind closed doors, the US had also complained about Dar’s statement.

The sources said that relations with the International Financial Institutions (IFIs) and foreign powers, and the future role of the Special Investment Facilitation Council (SIFC), are the key considerations for selecting the nominee for the slot of finance minister.

The Express Tribune said, in case Dar’s name is not chosen and the party decides to go ahead with appointing a politician, it would be either former Minister for Economic Affairs Sardar Ayaz Sadiq or former Power Minister Khawaja Mohammad Asif as the choices are limited after the exit of Miftah Ismail and Shahid Khaqan Abbasi.

“Newly elected Member of the National Assembly Bilal Kyani could either be appointed as the Minister of State for Finance in the centre, or he might be the next finance advisor to the chief minister of Punjab,” the report said.