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Islamabad, Pakistan – When Pakistan's new 19-member Cupboard was sworn in on March 11, there was one man standing within the queue: Muhammad Aurangzeb, a political outsider tasked with the problem of main the nation out of its financial disaster.
Aurangzeb, a seasoned banker who beforehand headed Habib Financial institution Ltd (HBL), one in every of Pakistan's largest industrial banks, was given the reins of the $350 billion economic system over a number of different contenders, together with four-time finance minister Ishaq Dar. Has been.
A graduate of the Wharton Faculty of Enterprise, College of Pennsylvania, Aurangzeb additionally labored in main worldwide banks comparable to Citibank and JP Morgan earlier than his six-year stint at HBL.
Aurangzeb, a twin citizen, had to surrender his Dutch nationality to carry public workplace in Pakistan. Though he’s not but a member of Parliament, as per the nation's guidelines, he has six months to change into an MP so as to proceed as a federal minister.
Shri Muhammad Aurangzeb formally took over because the Finance Minister of Pakistan after taking oath because the President at the moment. pic.twitter.com/RSBhulbLwl
– Ministry of Finance, Authorities of Pakistan (@Financegovpk) 11 March 2024
Aurangzeb is just not the primary banker to change into the Finance Minister of Pakistan. Earlier than him, Shaukat Aziz had held this publish for eight years (1999-2007) in the course of the tenure of Basic Pervez Musharraf earlier than changing into Prime Minister.
Later, below the federal government of former Prime Minister Imran Khan and his Pakistan Tehreek-e-Insaf (PTI), banker Shaukat Tarin was given the portfolio which lasted for one 12 months (2021-2022) earlier than the PTI authorities was eliminated via parliamentary means. For that they had. No-confidence movement in April 2022.
Aurangzeb's appointment comes at an important time when the nation is going through severe financial challenges, as he works with Prime Minister Shehbaz Sharif and the Pakistan Muslim League-Nawaz (PMLN) authorities. Sharif and his PMLN lately got here to energy by forming a coalition authorities after February 8 elections that had been marred by allegations of widespread rigging.
Analysts say one in every of Aurangzeb's first duties can be to urgently negotiate a brand new Worldwide Financial Fund (IMF) mortgage program after the present $3 billion, nine-month-long settlement expires in April.
A brand new mortgage program with the worldwide lender is critical for a rustic that’s presently burdened with greater than $130bn – at the least a 3rd of its gross home product – in exterior debt. Pakistan was focused to repay $24 billion by June this 12 months, nevertheless it managed to get some aid from bilateral collectors via rollover. The nation now has to pay again about $5 billion earlier than the top of the fiscal 12 months in June.
In the meantime, Pakistan's present international alternate reserves stand at simply $7.8 billion, sufficient to cowl about eight weeks of imports.
Its foreign money has devalued by greater than 50 % over the previous two years, whereas inflation, presently over 23 %, is projected to rise to just about 40 % in 2023, driving up power tariffs in addition to the worth of primary meals commodities. elevated from. ,
Many observers imagine that Aurangzeb's expertise with international banks and expertise in worldwide monetary markets is vital given Pakistan's debt challenges.
Sajid Amin Javed, a senior economist with the Sustainable Improvement Coverage Institute (SDPI) in Islamabad, stated Aurangzeb's appointment was a sign from the federal government that it was dedicated to initiating financial reforms – even when they had been politically unpopular.
“Partly, this is also a transfer to weaken the notion that PDM governments couldn’t operate up to now,” he instructed Al Jazeera, referring to the coalition that Sharif led to oust Imran Khan. The federal government was ousted, and its quick tenure coincided with skyrocketing inflation and rising financial wrestle for Pakistanis.
However Karachi-based economist Khurram Shahzad steered that Aurangzeb would wish greater than his background to achieve his job.
“The primary factor is just not who the finance minister is, however what that individual will do, what their imaginative and prescient is and what long-term pondering they’re bringing to the desk,” Shahzad instructed Al Jazeera.
SDPI's Islamabad-based Javed says these are difficult instances for any finance minister, however Aurangzeb's lack of political baggage may go in his favour.
“We might even see a extra reform-focused engagement with the IMF slightly than a political stability,” Javed stated, referring to stress from the voter foyer in opposition to reforms. Conventional politicians usually wrestle with this. Most significantly, he brings new pondering on financial coverage conduct. Given his international expertise, he could make radical modifications in financial coverage and the nation can focus afresh on financial development.
Karachi-based economist Ammar Habib Khan acknowledged Aurangzeb's expertise in finance, telling Al Jazeera {that a} macroeconomist is perhaps higher suited to the job than a banker.
“Usually, individuals on the prime (of the federal government) are unable to know the long term of reforms and the broader financial stability that must be achieved,” he stated. “They go for a fast repair. , principally bringing in individuals who can present Band-Aids slightly than driving long-term reforms.”