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March 17, 2008

New finance minister will have tough job

Top Story

March 17, 2008

ISLAMABAD: As economic storm clouds gather over Pakistan, two names have emerged as front-runners for the finance minister’s slot.

Whoever gets the job in the new government will have to deal with widening budget and trade deficits in an economy pressured by rising international oil prices and chronic shortages of energy and staples.

PPP and PML-N that won the last month's election are working out their coalition government line-up though no posts have been filled, not even that of prime minister.

A PML-N official said if the party got the finance portfolio, it wanted the post to go to Ishaq Dar, who served as commerce minister and finance minister in one of Nawaz Sharif's governments in the 1990s.

A PPP official said the PPP wanted Nawaz Sharif's party to take the finance post, adding the PPP had ‘a lot of respect for Dar’.

But if the post came to the PPP, then another former finance minister, Naveed Qamar, was expected to be the party's choice.

Analysts were generally favourable about both the possible candidates, but some said Dar, an accountant and former businessman, had more experience.

“Ishaq Dar was a very good finance minister. He's very well informed and knows the job,” said SM Muneer, a former president of the Federation of Pakistan Chambers of Commerce and Industry. “He was one of the best finance ministers. A very humble and down-to-earth person.”

Dar, 60, was commerce minister in a pro-business Sharif government in 1997 and identified export-led growth as a cornerstone of economic strategy.

He set ambitious export targets and relaxed restrictions on imports of raw materials from India.

He became finance minister in November 1998 and concluded negotiating an IMF rescue package to meet an economic crisis triggered by sanctions over nuclear tests in May that year.

Throughout the negotiations he refused to accept devaluation or a rise in utility charges or tax

rates. “Whether you call it voodoo economics or Darnomics, he has moved things,” the head of a state-run bank said a short while later.

But Dar, a top student from Punjab University, was criticised for what some saw as a naive approach to markets, blaming speculators for every rapid movement of the currency and stocks.

Dar was detained for nearly two years after General Musharraf overthrew Sharif.

Qamar, as chairman of the Privatisation Commission under Benazir Bhutto in 1994, set an ambitious two-year target for Pakistan to complete its privatisation programme.

A big landowner from a prominent political family in Sindh, Qamar, now 52, was a staunch Bhutto loyalist and was made privatisation minister in July 1996.

Three months later, the American and British educated Qamar took over the finance portfolio from Benazir Bhutto.

Analysts welcomed his appointment, saying it would improve credibility with the International Monetary Fund after uncertainty over who wielded economic influence. He was only finance minister for a few days before Benazir's second government was dismissed over corruption accusations.

Qamar was detained for a period but never convicted.

“Both would prove a good finance minister. Ishaq Dar is very competent while Naveed Qamar is also very polished,” said Azhar Saeed Butt, deputy of the Federation of Chambers of Commerce.

“Qamar was privatisation minister and knows the economy and would not be a bad choice but if Dar is given a chance then he would have an edge as he knows the problems at the ministry.”

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