Islamabad, Pakistan — When Pakistan’s 19-member new cupboard took oath on March 11, one man stood out within the lineup: Muhammad Aurangzeb, a political outsider tasked with the problem of steering the nation out of its financial woes.
Aurangzeb, a veteran banker who beforehand headed one among Pakistan’s largest business banks, Habib Financial institution Restricted (HBL), has been given the reins of a $350bn financial system over a number of different contenders, together with the four-time finance minister Ishaq Dar.
A graduate of the Wharton Faculty of Enterprise on the College of Pennsylvania, Aurangzeb additionally labored in main worldwide banks, corresponding to Citibank and JP Morgan, earlier than his six-year stint on the HBL.
A twin nationwide, Aurangzeb needed to relinquish his Dutch nationality to carry a public workplace in Pakistan. Whereas he’s not a member of the parliament as but, based on the nation’s guidelines, he has six months to grow to be a parliamentarian as a way to proceed as a federal minister.
Mr. Muhammad Aurangzeb formally took over the duty as Finance Minister of Pakistan after taking oath on the Presidency, at this time. pic.twitter.com/RSBhulbLwl
— Ministry of Finance, Authorities of Pakistan (@Financegovpk) March 11, 2024
Aurangzeb will not be the primary banker to grow to be Pakistan’s finance minister. Earlier than him, Shaukat Aziz held the place for eight years (1999-2007) underneath Basic Pervez Musharraf’s tenure, earlier than changing into a main minister.
Later, underneath the federal government of former prime minister Imran Khan and his Pakistan Tehreek-e-Insaf (PTI), banker Shaukat Tarin was given the portfolio which he held for one yr (2021-2022) earlier than the PTI authorities was eliminated by means of a parliamentary vote of no-confidence in April 2022.
Aurangzeb’s appointment comes at a essential time when the nation faces extreme financial challenges, as he works with Prime Minister Shehbaz Sharif and the Pakistan Muslim League-Nawaz (PMLN) authorities. Sharif and his PMLN got here to energy after forming a coalition authorities following the current February 8 elections, which have been marred by allegations of widespread rigging.
One among Aurangzeb’s first duties, say analysts, can be to urgently negotiate a brand new Worldwide Financial Fund (IMF) mortgage programme after the expiry of the present $3bn, nine-month-long settlement in April.
A brand new mortgage programme with the worldwide lender is important for the nation which is at present burdened by greater than $130bn – not less than a 3rd of its gross home product – in exterior money owed. Pakistan was scheduled to repay $24bn by June this yr however managed to safe some reduction from bilateral collectors by means of rollovers. The nation now has to pay practically $5bn earlier than the tip of the fiscal yr in June.
In the meantime, Pakistan’s present overseas foreign money shares stand at a paltry $7.8bn, sufficient to cowl nearly eight weeks of imports.
Its foreign money has devalued by greater than 50 % within the final two years, whereas inflation, at present at greater than 23 %, shot as much as practically 40 % in 2023, with a fast improve in power tariffs in addition to the worth of fundamental meals commodities.
Many observers imagine that Aurangzeb’s expertise with international banks and publicity to worldwide monetary markets is essential, contemplating Pakistan’s debt challenges.
Sajid Amin Javed, a senior economist related to the Sustainable Growth Coverage Institute in Islamabad (SDPI) stated Aurangzeb’s appointment is a sign from the federal government that it’s dedicated to introducing financial reforms – though they is likely to be politically unpopular.
“Partially, this will likely even be a step to dilute the notion that the PDM authorities couldn’t ship prior to now,” he informed Al Jazeera, referring to a coalition that Sharif led briefly after the elimination of Imran Khan’s authorities, and whose transient tenure coincided with skyrocketing inflation and mounting financial struggles for Pakistanis.
However Aurangzeb will want greater than his background to achieve his job, advised Karachi-based economist Khurram Schehzad.
“The important thing level will not be essentially who the finance minister is, however relatively, what would the particular person do, what their imaginative and prescient is, and what long-term considering they’re bringing to the desk,” Schehzad informed Al Jazeera.
Islamabad-based Javed of the SDPI says these are difficult instances for any finance minister however Aurangzeb’s lack of political baggage might work in his favour.
“We may even see a extra reforms-focused engagement with [the] IMF as a substitute of political balancing,” Javed stated, referring to pressures from voter lobbies towards reforms that conventional politicians typically grapple with. Most significantly, he brings contemporary considering on financial coverage conduct. Given his international expertise, he might go a bit deeper on overhauling of financial coverage and nation may even see a renewed deal with financial development.”
Karachi-based economist Ammar Habib Khan, whereas acknowledging Aurangzeb’s expertise in finance, informed Al Jazeera {that a} macroeconomist might need been higher suited to the job than a banker.
“Often, these on the helm [of the government] are unable to grasp the lengthy lead time related to reforms, and the macroeconomic steadiness that must be attained,” he stated. “They go for a quick-fix resolution, principally bringing in folks that may present band-aids relatively than drive long-tailed reforms.”
