Days after PML-N’s Shehbaz Sharif took cost to turn into the twenty fourth Prime Minister of Pakistan and appointed Muhammad Aurangzeb because the Finance Minister of the nation, the newly-appointed minister and former banker finds himself dealing with a frightening activity: to negotiate phrases with the Worldwide Financial Fund (IMF) for extending funding amenities to the South Asian nation.
Pakistan is at present starring at a significant financial disaster because the nine-month-long $3 billion mortgage settlement it signed with IMF is about to run out. The newly elected coalition authorities has now been tasked to unburden the nation of exterior money owed of round $130 billion, which in response to a report by Aljazeera, is a 3rd of Pakistan’s GDP.
Who’s Muhammad Aurangzeb?
A graduate of the Wharton Enterprise College on the College of Pennsylvania, Aurangzeb is a seasoned banker, who, over the course of his lengthy profession, labored with international lenders akin to Citibank, the Royal Financial institution of Scotland, and JP Morgan, amongst others.
In February 2018, Aurangzeb was appointed because the president and CEO of Habib Financial institution Restricted (HBL), Pakistan’s largest lender by way of deposits.
Over his six 12 months stint at HBL, Aurangzeb made fairly the mark, growing HBL’s buyer base from 12 million to 36 million, and changing into one of many highest paid CEOs within the South Asian nation, with an annual wage of 352 million Pakistani rupees (as of March 2024).
Days after reviews on his annual earnings got here out, Aurangzeb was named the Finance Minister.
Aurangzeb tasked with dealing with ballooning loans
Pakistan was presupposed to repay loans value $24 billion by June 2024, however it has for now managed to safe some reduction from bilateral collectors by means of rollovers. Below the revised compensation construction, the nation has to pay round $5 billion by the top of June this 12 months.
Given his in depth expertise in dealing with finance affairs in international banks, specialists consider that Aurangzeb’s appointment because the Finance Minister is essential for the struggling financial system of Pakistan.
Pakistan’s exterior public debt sharply rose by $1.2 billion in six months to $86.358 billion as of September 30, 2023. Pakistan obtained whole international inflows of $3.5 billion in July-September 2023 towards mortgage repayments of $1.5 billion, leading to a web influx of $1.97 billion.
Whereas Aurangzeb is certainly seasoned, he’s now in command of the $350 billion financial system of Pakistan, however specialists consider he’ll cope.
Aljazeera quoted Sajid Amin Javed, a senior economist related to the Sustainable Improvement Coverage Institute in Islamabad (SDPI) as saying that Aurangzeb’s appointment exhibits the federal government’s willingness to introduce ‘financial reforms’.
“Partially, this will even be a step to dilute the notion that the PDM authorities couldn’t ship up to now,” Javed mentioned as he pointed on the coalition that Sharif led briefly after the elimination of Imran Khan’s authorities, and whose transient tenure coincided with skyrocketing inflation.
Karachi-based economist Khurram Schehzad mentioned, “The important thing level isn’t essentially who the Finance Minister is, however somewhat, what would the individual do, what their imaginative and prescient is, and what long-term pondering they’re bringing to the desk.”
“We may even see a extra reforms-focused engagement with [the] IMF as an alternative of political balancing. Most significantly, he brings recent pondering on financial coverage conduct. Given his international expertise, he could go a bit deeper on overhauling of financial coverage and nation may even see a renewed deal with financial progress,” Javed informed Aljazeera.
Pakistan’s present international foreign money shares stay at $7.8bn, which is enough to fetch the nation solely about eight weeks of imports. Its foreign money has devalued by over 50 %, whereas inflation, at present at greater than 23 %, shot as much as practically 40 % in 2023.
(Printed 14 March 2024, 09:16 IST)