And so it happened! Asad Umar’s resignation was always on the cards. People were baffled at the under-par performance of a man they thought of as an economic wizard, a sort of a messiah who would ultimately deliver us from the problems wrought on previously.
But my views were always a bit different, having seen him close quarters and the legacy of his interference in Khyber Pakhtunkhwa, where his and Jahangir Tareen’s philosophy of how to conduct economic management resulted in a plethora of ‘autonomous bodies’ like PEDO, where they both managed to install their friends on hefty remuneration. One of Asad’s buddy was installed as the chief of PEDO, an appointment later ruled by courts as completely illegal and devoid of merit. Other than that, a lot of his economy talks made little sense, whether be it warning the United States about how much of their debt China holds, or of dreaming a turnaround of the heavily indebted and inefficient public sector entities by initiating yet another ‘company’ on the lines of Khazana model in Malaysia. How little he understood the administrative workings in Pakistan can be gauged by the fact that the new company, Sarmaya-e-Pakistan, has three board members as its first appointment, all of them serving bureaucrats! As I had pointed out in my previous article, the bureaucracy has gamed the system to an extent that turning around the public sector enterprises is almost impossible now.
So there was no surprise that he finally left before more ignominy came his way. But even more ironic, and totally outlandish, is the appointment of Dr Hafeez A Sheikh. More on the slick Dr Shiekh in the lines that follow. But first, what an irony we find ourselves in, a state of affairs fit for a Shakespearean drama. We’ve grown up seeing PM Khan loudly denounce, curse, revile and scandalise the rule of the PPP and the PML-N. And he still carries on with it. I, for once, do not doubt that these two parties left the country with problems of epic proportions. But it is just incredible to watch the same cohort surrounding Imran that used to surround the PPP and the PML-N leadership. More than half of the present cabinet is made up of turncoats of these two parties. And now comes Shiekh, a former PPP finance minister, who used to praise Zardari to no end. Let us not forget that he comes at the cost of PM Khan’s most trusted aide.
The gist of the argument is that the PM now needs to put brakes to his mantra of the former regimes’ corruption because he is now reliant on the same chaps to run his government, thus losing the moral grounds for indulging in mudslinging. An irony of Shakespearean proportions, wouldn’t you agree?
But even more interesting episode to unfold in all this drama is the sudden arrival on the scene of Hafeez A. Shaikh. The slick doctor has served in both the Musharraf and PPP administrations, and now finds favour with the PTI’s government. Out of nowhere his name started being thrown around as a replacement, and within a day he was appointed ‘advisor’ to the PM on finance. A bit of perspective over his appointment would probably unravel the mystery, and also the intricacies of the workings of the global system.
Dr Sheikh can only be found in Pakistan when he is holding a ministerial portfolio. Otherwise, he vanishes without a trace, rarely heard or rarely seen. He also seems to have a job ready for him as soon as he leaves Pakistan.
It would help to remember that Pakistan and IMF have almost reached a final agreement over a bailout package. But there is still a critical sticking point: IMF wants complete details of the loans taken from China that Pakistan was, till now, unwilling to provide. Dr Shaikh’s ascension as finance minister would take care of this problem. But if this is the case, then why was he appointed in the first place? Answer: Pakistan doesn’t have any choice but to bow down to orders from outside. Otherwise, the IMF loan and other donor dollars are not going to come, and Pakistan would not be able to stave off a default. There is no other way to explain the mystery of him parachuted straight into the finance minsters’ seat from outside. It is not his qualification that’s the concern, but the timing and the manner that raises eyebrows. And this is not the first time it has happened in Pakistan’s history. Revisit the appointment of Moeen Qureshi, another of the donor agency’s special emissary, in the 1990s to understand the point.
Dr Sheikh would have another important function to perform. He would be keeping a close eye on the finances of the Islamic republic, letting concerned quarters know where things stand. Believe it or not, contingency plans would already be in the offing (if not already made) in case things get out of control. The spectre of a nuclear-armed Islamic country, with major part of the population drenched in Islamic fervour from head to toe, is a possibility too frightening to be left alone. The dysfunctional nature of the administration and its dire financial straits make Pakistan a dangerous proposition. That is why Obama named Pakistan when once asked about the one thing that keeps him up at night. The presence of a person like Dr Sheikh would ensure that the world has a real time picture of where things stand, at least in terms of finances.
Where does Pakistan go from here? The resignation of the finance minister has exposed what was obvious: that his nine months made things even worse than before. Pakistan is living on borrowed money, as it has been for some time now. But a time will approach soon when even the creditors will put up their hands and say “no more.” It is drowning in debt and its ability to repay the accumulated debt is getting increasingly beyond its capacity. More importantly, the way the economy is structured leaves little room for improvement. Enough examples have been written by yours truly and others regarding this fact. I’ll give two examples here to again drive home this point once again.
Amidst the joy over shrinking exports, the FBR has reported that its tax collection shortfall will be in the range of a gargantuan Rs450 billion. A major cause of this is the shortfall in import duties due to lower imports. We know that higher imports drain our foreign exchange reserves. But in this case, even lower imports are problematic because they drain the tax collection. Similarly, as Pakistan’s people reel from the inflationary storm unleashed in the last few months, it is a boon for public sector companies like OGDCL whose profits are closely linked to rise in prices of hydrocarbon. Thus, in this case, the interests of the people and the OGDCL are on opposite sides (lest we forget, the rationale given for maintaining these kinds of entities in the public sector is that they look after peoples’ interest).
These examples perfectly demonstrate what I meant by the structure of the economy. Things will only worsen, unless this structure changes. In the last decade or so, there hasn’t been many (if any) attempts at tackling this issue. Hence the continuous fall into the economic abyss, from which it will be extremely difficult to get out now.
The writer is an economist
But my views were always a bit different, having seen him close quarters and the legacy of his interference in Khyber Pakhtunkhwa, where his and Jahangir Tareen’s philosophy of how to conduct economic management resulted in a plethora of ‘autonomous bodies’ like PEDO, where they both managed to install their friends on hefty remuneration. One of Asad’s buddy was installed as the chief of PEDO, an appointment later ruled by courts as completely illegal and devoid of merit. Other than that, a lot of his economy talks made little sense, whether be it warning the United States about how much of their debt China holds, or of dreaming a turnaround of the heavily indebted and inefficient public sector entities by initiating yet another ‘company’ on the lines of Khazana model in Malaysia. How little he understood the administrative workings in Pakistan can be gauged by the fact that the new company, Sarmaya-e-Pakistan, has three board members as its first appointment, all of them serving bureaucrats! As I had pointed out in my previous article, the bureaucracy has gamed the system to an extent that turning around the public sector enterprises is almost impossible now.
So there was no surprise that he finally left before more ignominy came his way. But even more ironic, and totally outlandish, is the appointment of Dr Hafeez A Sheikh. More on the slick Dr Shiekh in the lines that follow. But first, what an irony we find ourselves in, a state of affairs fit for a Shakespearean drama. We’ve grown up seeing PM Khan loudly denounce, curse, revile and scandalise the rule of the PPP and the PML-N. And he still carries on with it. I, for once, do not doubt that these two parties left the country with problems of epic proportions. But it is just incredible to watch the same cohort surrounding Imran that used to surround the PPP and the PML-N leadership. More than half of the present cabinet is made up of turncoats of these two parties. And now comes Shiekh, a former PPP finance minister, who used to praise Zardari to no end. Let us not forget that he comes at the cost of PM Khan’s most trusted aide.
The resignation of the finance minister has exposed what was obvious: that his nine months made things even worse than before. Pakistan is living on borrowed money, as it has been for some time now
The gist of the argument is that the PM now needs to put brakes to his mantra of the former regimes’ corruption because he is now reliant on the same chaps to run his government, thus losing the moral grounds for indulging in mudslinging. An irony of Shakespearean proportions, wouldn’t you agree?
But even more interesting episode to unfold in all this drama is the sudden arrival on the scene of Hafeez A. Shaikh. The slick doctor has served in both the Musharraf and PPP administrations, and now finds favour with the PTI’s government. Out of nowhere his name started being thrown around as a replacement, and within a day he was appointed ‘advisor’ to the PM on finance. A bit of perspective over his appointment would probably unravel the mystery, and also the intricacies of the workings of the global system.
Dr Sheikh can only be found in Pakistan when he is holding a ministerial portfolio. Otherwise, he vanishes without a trace, rarely heard or rarely seen. He also seems to have a job ready for him as soon as he leaves Pakistan.
It would help to remember that Pakistan and IMF have almost reached a final agreement over a bailout package. But there is still a critical sticking point: IMF wants complete details of the loans taken from China that Pakistan was, till now, unwilling to provide. Dr Shaikh’s ascension as finance minister would take care of this problem. But if this is the case, then why was he appointed in the first place? Answer: Pakistan doesn’t have any choice but to bow down to orders from outside. Otherwise, the IMF loan and other donor dollars are not going to come, and Pakistan would not be able to stave off a default. There is no other way to explain the mystery of him parachuted straight into the finance minsters’ seat from outside. It is not his qualification that’s the concern, but the timing and the manner that raises eyebrows. And this is not the first time it has happened in Pakistan’s history. Revisit the appointment of Moeen Qureshi, another of the donor agency’s special emissary, in the 1990s to understand the point.
Dr Sheikh would have another important function to perform. He would be keeping a close eye on the finances of the Islamic republic, letting concerned quarters know where things stand. Believe it or not, contingency plans would already be in the offing (if not already made) in case things get out of control. The spectre of a nuclear-armed Islamic country, with major part of the population drenched in Islamic fervour from head to toe, is a possibility too frightening to be left alone. The dysfunctional nature of the administration and its dire financial straits make Pakistan a dangerous proposition. That is why Obama named Pakistan when once asked about the one thing that keeps him up at night. The presence of a person like Dr Sheikh would ensure that the world has a real time picture of where things stand, at least in terms of finances.
Where does Pakistan go from here? The resignation of the finance minister has exposed what was obvious: that his nine months made things even worse than before. Pakistan is living on borrowed money, as it has been for some time now. But a time will approach soon when even the creditors will put up their hands and say “no more.” It is drowning in debt and its ability to repay the accumulated debt is getting increasingly beyond its capacity. More importantly, the way the economy is structured leaves little room for improvement. Enough examples have been written by yours truly and others regarding this fact. I’ll give two examples here to again drive home this point once again.
Amidst the joy over shrinking exports, the FBR has reported that its tax collection shortfall will be in the range of a gargantuan Rs450 billion. A major cause of this is the shortfall in import duties due to lower imports. We know that higher imports drain our foreign exchange reserves. But in this case, even lower imports are problematic because they drain the tax collection. Similarly, as Pakistan’s people reel from the inflationary storm unleashed in the last few months, it is a boon for public sector companies like OGDCL whose profits are closely linked to rise in prices of hydrocarbon. Thus, in this case, the interests of the people and the OGDCL are on opposite sides (lest we forget, the rationale given for maintaining these kinds of entities in the public sector is that they look after peoples’ interest).
These examples perfectly demonstrate what I meant by the structure of the economy. Things will only worsen, unless this structure changes. In the last decade or so, there hasn’t been many (if any) attempts at tackling this issue. Hence the continuous fall into the economic abyss, from which it will be extremely difficult to get out now.
The writer is an economist