(Bloomberg) — 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.
As a prominent banker and JPMorgan Chase & Co. alumnus, Aurangzeb comes as well equipped as any of his predecessors to face the challenge. But that’s to disregard an array of extra factors affecting the role which are outside his control, including volatile domestic politics, tensions with neighbors India, Afghanistan and Iran, and a catastrophic position on the front line of climate change.
“Broadly, the finance minister’s job is to manage and steer the economy,” said Mosharraf Zaidi, a former government adviser and founder of policy think tank Tabadlab based in Pakistan’s capital, Islamabad. “It seems simple when framed this way. In fact, it is one of the most complex jobs on the planet.”
Among the most immediate of his tasks is to seal a deal by June with the IMF for a minimum three year program worth at least $6 billion. 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’s a person who wants to get things done,” he said of Sharif in an interview in his ministry in Islamabad.
“This is the time to actually capitalize on that mandate and ensure that all the tough decisions that need to be taken are taken now,” said Aurangzeb. The alternative would be “a huge missed opportunity that we can ill afford.”
“We should consult with everyone, we should try to build a consensus, but a few things we’ll just have to bite the bullet and do it,” he said.
Hailing from a prominent family in Lahore — his father was Pakistan’s attorney general — Aurangzeb, 59, went to the nation’s elite Aitchison College then studied at Wharton on a scholarship before working at Citigroup Inc. in New York early in his career.
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 again accepted a move back to his home country 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.
At the time, his return to Pakistan surprised those he worked with, since he was seen to be leaving the comfort of Singapore and a cushy role at JPMorgan for a post that few considered a dream job, according to a former colleague.
Aurangzeb would often speak about his love for the country of his birth and the elevation to finance minister is seen as evidence of his commitment to the nation, the person said, asking not to be named discussing personal decisions.
Married with two adult children, Aurangzeb — also known as Auri — was a member of the prime minister’s economic advisory council in 2022 during Sharif’s previous term, a role that gave him an inside view of the premier’s management style. He 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.
“It’s a huge privilege,” he said. “But then it comes with a set of expectations.”
Seats of Power
His ministry sits close to the Margalla hills that bound the capital to the north, a 20 minute walk from the prime minister’s office, with the national assembly midway between the two seats of government power. A recent introduction to his office is a large television with split screens showing stock market prices, economic indicators, and Bloomberg TV.
Aurangzeb was one of the highest paid corporate leaders in Pakistan before joining the government. Now, in line with other cabinet members, he’s not drawing a salary. He also renounced his Dutch citizenship to become eligible for the post.
What he describes as “national service” will mean reaching tough decisions under the toughest IMF program in years if he and Sharif are to bring the economy back from the brink. These include putting a stop to accumulating more state losses by raising energy prices and selling state-owned companies, unpopular choices that will inevitably trigger pushback from powerful business lobbies and stoke public anger — a chief reason they’ve been avoided to date.
Aurangzeb will approach the challenge as a political outsider. He is not part of Sharif’s political party, and was appointed in a technocratic capacity. Sharif leads a shaky coalition whose two main allies have said they will support the government on a case-by-case basis only.
Fresh Face
There have already been attempts to contain Aurangzeb’s role. Sharif decided to chair the Economic Coordination Committee, a top policy-making forum that is usually headed by the finance minister, before backtracking a day later after public criticism.
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.
With ministers routinely swapped out and back in again, his is the first fresh face at the finance ministry in six years. Finance ministers are regularly blamed for Pakistan’s economic woes, and there have been more than 10 in the past decade; Sharif had two in his previous 16-month tenure.
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.
“You have to push yourself,” he said. “You have to get out of your comfort zone.”
–With assistance from Chanyaporn Chanjaroen.
©2024 Bloomberg L.P.
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