D for Dar, D for Defender?

Some of the detractors of Mian Nawaz Sharif say that Pakistan is living in isolation. Detractors are good people that they keep things in the right perspective and enable the people to draw comparisons and arrive at the right conclusions.

This isolation theme standing apart, at least one can say with authenticity that our Finance Minister Senator Ishaq Dar is not living in isolation. Every other day, he is moving places (including foreign lands) or some dignitary from overseas is either calling on him every now and then or phoning him either to congratulate him for achievements or for defending the country against many odds (read economic odds).

And with the award of the title of Finance Minister of the Year or the best finance minister of the year of South Asia, conferred on him by the renowned newsletter 'Emerging Markets', the impression formed is that isolation dare not touch this country that is inhabited by so well-connected and well-appreciated souls like the best Finance Minister of South Asia. Glut of emails before me tell me that right from US ambassador to UK High Commissioner, Dar received congratulations from the four corners of the world.

I too want to join this bandwagon but before doing so, I want to assess what makes him the best, albeit in South Asia (even South Asia is not a small domain).

Here, I would borrow a few words from the envoys of United States and Britain besides taking into consideration the wording of the letter of recognition from ‘Emerging Markets’. As regards the aforementioned diplomatic dignitaries they have congratulated the Finance Minister for successfully completing the 3-year IMF Extended Facility program.

Was this destination so difficult to achieve that congratulations are pouring in so broadmindedly after this ‘achievement’? Of course, coping with the conditionalities is no joke. No ordinary economy or an ordinary Finance Minister dare stare into the eyes of the giants known as World Bank, IMF and IFC. One needs to be armed to the teeth with finance wizardry and with the iron resolve to muster enough funds to repay huge liabilities.

Finance wizardry? Yes, finance wizardry but nothing to worry, it has worked both ways. Within Pakistan, it has broadened the tax net to an amazingly high degree whereas abroad, it has also developed an efficacious antidote for IMF poisons. That is why I call it an amazing combination which is not possible without magic or wizardry. Keeping the two opposite sides happy and satisfied is a task next to impossible. But, the common perception is that whatever the high level of economic growth and macrostability achieved by the present government, a large number of people are waiting for the day when macrostability would convert into microstability i.e the stability at the micro level or the level of the downtrodden. This is, in itself, a riddle that many finance ministers of this country (and of other countries) have been trying to resolve by applying different methodologies. Some of them have been focusing more on social sector growth and less on macro things while others have been pursuing the different path.

I don’t think that the path chosen by Ishaq Dar has as many pitfalls as the path chosen by some of his predecessors and peers in the foreign countries since, according to my own observation based on my conversations with Mr Dar as well as on the official documents available at my end, the Finance Ministry is time and again claiming that it is not only concentrating on the continuity of the reform agenda that has worked wonders both at home and abroad, but also working on the ‘consolidation of gains’ strategy.

The growth achieved by Pakistan for three consecutive years at the rate of around 4 per cent as against economic growth in many stable economies in the proximity of 2 per cent is a stabilizing factor and if this achievement is allowed to sustain through peace and harmony and untiring efforts (that our finance wizards are putting in without break), the consolidation process will start soon. The problem is that people are scared and apprehensive in the light of their past experiences when neither the economic growth kicked off nor did the consolidation process take the start although the conditions had not been so disturbing like the ones we are experiencing at present in the shape of political turmoil and agitations on one pretext or the other.

At this juncture, I would like to reproduce a few words from the letter addressed by Research Executive Valeria Langstaff to Ishaq Dar, inviting the latter to the awards ceremony scheduled for giving the award titled Finance Minister of the Year for South Asia It would have been a worthless award had not the 'Emerging Markets' taken stock of the crisis situation in the global finance markets. The letter says, “While we recognise it has been difficult times in the international financial markets, your stewardship of your nation's finances has been admirable since taking over. Among the many reasons are that Pakistan has, under your guidance, become an increasingly important regional economy thanks to the focus put on growing FDI, the impressive reputation of economic competence, the desire to have a greater presence in the global capital markets, the new securities legislation, the clever merger of the stock exchanges and the increasingly important relationship with China.

Thank God that this letter is free from highly technical jargon that has continued to confuse and mislead the people for years. The fact is that people are already quite weary of highly technical indexes that are usually presented to convince that the country is moving forward on the track of stability. In Urdu, the term is Iqtisadi Aishariays.

The government claims that these Aishariays are all pointing towards sustained, vertical growth. Some people, however, have a different point to raise. They represent multitudes of people who don’t find good investment opportunities in the local market and whose only bread and butter comes from banks where they have deposited their white money. These people are worried over the steep fall in Kibor rate that has made their lives miserable. It is now for our intellectual Finance Minister to devise a two-pronged mechanism to keep the capital flow easy and smooth for the entrepreneurs and at the same time, keep the Kibor steady against further decline to help a very sizeable non-business class that lives on honest means.

The public is ready to sign the instrument of full powers to the Finance Minister on such issues the way the Prime Minister Muhammad Nawaz Sharif signed such an instrument when Dar was leaving for Paris last month to sign the multilateral anti-tax evasion convention of OECD. OECD is a hard nut to crack and Ishaq Dar and his ministry had to work incessantly for months to become a part of this world recognized convention that carries many benefits for Pakistan. This benefit story is long but in my humble opinion, the two major benefits are quite worthwhile and they are: making it almost impossible to stash illegal funds in foreign banks and reinforcement of FBR to track tax evaders, no matter where they accumulate their wealth.

If the latter two targets are achieved, which at this very moment, appear to be an uphill task, given the shrewdness of people engaged in deals under the table, then it would be the beginning of the end to corruption, that corruption that has eaten into the vitals of this land of the pure.

In the end, congratulations to Pakistan's finance team, Pak expatriates and business community for reaching the all-time high 24.5 billion dollars Forex mark and for the 2.5 times oversubscription of Sukuk.

— mianrehman1@gmail.com