Islamabad, Pakistan — When Pakistan's new 19-member cabinet was sworn in on March 11, one man stood out from the lineup. It is Muhammad Aurangzeb, a political outsider tasked with pulling the country out of its economic woes.
Aurangzeb beat out several other candidates, including Ishaq Dar, a veteran banker and four-time finance minister who previously headed Habib Bank Limited (HBL), one of Pakistan's largest commercial banks. He was given the reins of a $350 billion economy.
A graduate of the Wharton School of Management at the University of Pennsylvania, Aurangzeb also worked at major international banks such as Citibank and JP Morgan before spending six years at HBL.
Aurangzeb, a dual citizen, had to renounce his Dutch nationality in order to hold public office in Pakistan. He is not yet a member of parliament, but according to the country's regulations, he has six months before becoming a member to continue as a federal minister.
Mr. Muhammad Aurangzeb officially took over the position of Minister of Finance of Pakistan after taking oath at the Presidential Palace today. pic.twitter.com/RSBhulbLwl
— Ministry of Finance, Government of Pakistan (@Financegovpk) March 11, 2024
Aurangzeb is not the first banker to become Pakistan's finance minister. Shaukat Aziz previously became prime minister after holding the position for eight years (1999-2007) during General Pervez Musharraf's tenure.
Later, under former Prime Minister Imran Khan and his Pakistan Tehreek-e-Insaf (PTI) government, banker Shaukat Tarin was given the portfolio for a year until the PTI government was removed through parliament. 2021-2022) was held. A vote of no confidence will be held in April 2022.
Aurangzeb's appointment comes at a critical time when the country is facing serious economic challenges, and he is aligned with Prime Minister Shehbaz Sharif and the Pakistan Muslim League-Nawaz (PMLN) government. Mr Sharif and his PMLN came to power after forming a coalition government after the recent February 8 election marred by widespread allegations of fraud.
Analysts say one of Aurangzeb's first tasks will be to urgently negotiate a new International Monetary Fund (IMF) loan program after the existing $3 billion, nine-month agreement ends in April. It is said that it is something to do.
The country, which currently has more than $130 billion in foreign debt, at least a third of its gross domestic product, needs new financing programs from global financial institutions. Pakistan was due to repay $24 billion by June this year, but managed to secure some relief from bilateral creditors through a rollover. The country now has to pay nearly $5 billion by the end of the fiscal year in June.
Meanwhile, Pakistan's current foreign exchange stock is just $7.8 billion, enough to cover just about eight weeks' worth of imports.
The currency has lost more than 50% of its value in the past two years, and inflation, currently more than 23%, is expected to rise to nearly 40% in 2023, causing energy bills and basic food prices to rise rapidly. . .
Many observers believe Aurangzeb's experience with global banks and exposure to international financial markets are important given Pakistan's debt problems.
Sajid Amin Javed, senior economist at Islamabad's Sustainable Development Policy Institute (SDPI), said Aurangzeb's appointment shows the government's commitment to introducing economic reforms, even if they are politically unpopular. He said that it shows.
“Partly, this may also be a step to diminish the perception that the PDM government has failed to deliver results in the past,” he told Al Jazeera, adding that Sharif's leadership after the ouster of Imran Khan's government He referred to the coalition government he briefly led, and his brief tenure. It coincided with soaring inflation and intensifying economic hardship for Pakistanis.
But Mr. Aurangzeb will need more than a background to succeed in his job, suggested Karachi-based economist Furram Shehzad.
Shehzad told Al Jazeera: “It's not so much who the finance minister is, but rather what he intends to do, what his vision is and what long-term thinking he brings to the table. Is it true?” he said.
Javed of the Islamabad-based SDPI said these are difficult times for any finance minister, but Aurangzeb's lack of political baggage could work to his advantage.
“We may see more reform-focused engagement.” [the] We prioritize the IMF, not political balancing,” Javed said, referring to pressure from voter lobbies for reforms that are often undertaken by traditional politicians. Most importantly, he brought new ways of thinking about economic policy management. Given his global experience, he may go a little further into reviewing economic policy, and the country may refocus on economic growth. ”
Karachi-based economist Ammar Habib Khan told Al Jazeera that while he acknowledged Aurangzeb's experience in finance, he might have been better suited for the job as a macroeconomist than as a banker. Told.
“Typically, the people at the helm are [of the government] “They fail to understand the long lead times associated with reforms and the macroeconomic balance that needs to be achieved,” he said. “They are looking for a stopgap solution, and all too often they bring in people who can provide a Band-Aid, rather than driving long-term reform.”