In less than three years of his tenure Prime Minister Imran Khan has appointed his third Finance Minister. Mr Khan had no consistent policy to turn round the national economy when he assumed office. However, he had whims which he tried to sell to the Finance Ministers he appointed. Further, running a coalition with a wafer-thin majority, he was hesitant to annoy any powerful section of society for fear that it might further impair his political standing.
Mr Asad Umar, having corporate experience, was considered the PTI’s financial wizard. Forgetting whatever he had learnt about running a country’s economy, the loyalist appointed Finance Minister delayed taking timely recourse to the IMF because the PM was deadly opposed to the idea. Mr Umar pandered to Mr Khan’s fanciful plans, like providing hens and buffalos to help the poor set up small businesses, thus bringing themselves and the country out of poverty. Eight months of floundering deepened uncertainty in the country leading to Mr Umar’s replacement with Dr Abdul Hafeez Sheikh.
Dr Shaikh and new SBP Governor Mr Raza Baqir consigned the country to the full embrace of the IMF. The IMF programme was aimed at bringing government finances into a primary surplus, reducing the overall fiscal deficit, introducing currency flexibility, and restoring some sense of sustainability to the economy. Within months the adjustment package led to the economy contracting 30 percent, causing large-scale shutdowns followed by layoffs. The FBR was required to raise taxes but was discouraged by the PM from confronting the large trading community which opposed all attempts to document its economic transactions.
Dr Shaikh was removed by the PM reluctantly. After losing the Senate election the Finance Minister could not head any government department, as ruled by the Islamabad High Court a few month back. The policies dictated by the IMF will now continue to be pursued by Industries Minister Hammad Azhar, who has replaced Dr Shaikh. Mr Azhar has meanwhile promised to further consolidate what he calls the gains made since 2018 and strengthen the growth momentum. His claims that the sharp rise in prices of goods of daily consumption is due to disruption of supply chains because of the covid-19 pandemic would lead many to wonder if this is really true about the hike in prices of wheat, sugar and vegetables.
