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Tuesday, July 16, 2024

With No Pay, Pak Finance Minister Leaves Banker Life Behind To Fix Economy

Pakistan’s new finance minister is on a mission to fix his country. To many, it’s an unenviable task.

Muhammad Aurangzeb took up the post last month at a time when Pakistan’s economy is enduring the most turbulent period in its history. 

Lurching from one bailout program to the next with the International Monetary Fund classifying its debt as only borderline sustainable, Pakistan has Asia’s fastest inflation, anemic growth, and one of the lowest tax-collection rates in the world. 

Pakistan’s finance minister, Auri Aurangzeb, is facing a challenging task as the country faces the challenge of managing and steering the economy. The finance minister’s role is one of the most complex jobs on the planet, with the most immediate task being to seal a deal with the IMF for a minimum three-year program worth at least $6 billion by June. Key objectives in the negotiations for the fund will include broadening the tax base, improving debt sustainability, and restoring viability to the energy sector, all steps that Pakistan has avoided for decades.

Aurangzeb cites a shared sense of urgency with Prime Minister Shehbaz Sharif, who was elected to a second successive term in March. He believes that this is the time to capitalize on the mandate and ensure that all the tough decisions that need to be taken are taken now. He suggests consulting with everyone and trying to build a consensus, but a few things we’ll just have to bite the bullet and do it.

Aurangzeb, a prominent banker and JPMorgan Chase & Co. alumnus, comes from a prominent family in Lahore and attended Aitchison College, Wharton, Citigroup Inc., and later worked at Citigroup Inc. in New York. He returned to Pakistan to work at a unit of ABN Amro Bank NV, later shifting to the bank’s headquarters in Amsterdam. In 2018, he accepted a move back to Pakistan when he left JPMorgan in Singapore to take over as chief executive officer of Pakistan’s largest lender, Habib Bank Ltd., just after it had been fined $225 million and forced to end its US operations for weak anti-money-laundering controls and sanctions compliance.

Aurangzeb was tapped for the finance post a few weeks before the election, flying from his base in the commercial capital Karachi to meet with Sharif multiple times before accepting the offer. He is married with two adult children and was a member of the prime minister’s economic advisory council in 2022 during Sharif’s previous term. He was appointed in a technocratic capacity and will approach the challenge as a political outsider, not part of Sharif’s political party.

There have already been attempts to contain Aurangzeb’s role, with Sharif chairing the Economic Coordination Committee, a top policy-making forum usually headed by the finance minister. Foreign Minister Ishaq Dar, a veteran politician who served four separate stints as finance minister until he was shunted sideways by Sharif, has been installed as head of a privatization committee that would normally have been led by Aurangzeb or the minister for privatization.

Aurangzeb is clear that his key challenge is the economy and not politics. For all his corporate experience, he says he’s focused on Pakistan’s future rather than dwelling on his past achievements.

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(Source: NDTV)

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