Pakistan’s New Financial Troubles and a New Finance Minister

By Mahvish Akhtar

Pakistan has had to take some complex steps lately amid pressure from World Bank and other stakeholders since the country’s inability to create consensus and instability in the narrowing political space past few months. Last week WB asked the government to make some goodwill and a positive narrative regarding where the over $1 billion budget support loans are being spent.

The new  Finance Minister Ishaq Dar assured WB two days before his departure to Washington, where he participated in a high-profile conference on the sidelines of the WB and International Monetary Fund (IMF) annual meetings.

The conference was co-chaired by the World Bank Group and a substantial 7- Group members. The UK aimed at getting the world’s financial support for Pakistan’s flood-affected population.

The conference was arranged ahead of the international donors’ conference, which took place in Paris and was hosted by the French president to garner support for Pakistan in this current situation. 

Pakistan’s new Finance Minister, Dar, met with Najy Benhassine, the country director of the WB, to discuss his scheduled meetings in Washington, which included one with the WB president.

The Pakistan finance minister briefed Benhassine about the economic challenges that the country is currently facing. He said that the present government is mindful of these issues and is taking pragmatic steps to resolve blockages to growth.

“The present government is committed to setting the economy on a sustainable and inclusive growth path,” Dar told the World Bank official, according to a statement issued by Islamabad.  To help Pakistan tackle the ongoing climate-induced catastrophe, the World Bank Saturday announced the allocation of $2 billion in funds from existing projects for emergency operations in flood-affected areas.

Early last week, the Asian Development Bank (ADB) announced providing flood-relief support of $2.3-2.5 billion to Pakistan. The announcement came during Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar’s meeting with a delegation of ADB, headed by its country director Yong Ye.

PML-N senior leader Ishaq Dar was sworn in as a senator on Tuesday, October 4^th, 2022, as the next finance minister of Pakistan. The decision to appoint Dar was made at meetings at a central London apartment owned by an Islamabad-based businessman. Dar will be replacing Miftah Ismail, who resigned as finance minister of Pakistan a week prior to Dar’s appointment.

The first meeting on Ismail’s removal occurred before Prime Minister Shehbaz Sharif left London for New York. The meeting was held among PML-N patron and the elder brother of the now Premier of Pakistan, Nawaz Sharif.  The meeting location between PM Shehbaz Sharif and Ishaq Dar’s was kept secret.

It was discovered later that the meeting was held at a Central London apartment of Jawad Sohrab Malik, a Pakistani billionaire from Islamabad. Malik is the nephew of Mohammad Mian Soomro, former caretaker of the prime minister of Pakistan, chairman of the Senate, and privatization minister during Nawaz Sharif’s government. The second meeting was held on Saturday, October 8^th, 2022, among the Sharif brothers, Ishaq Dar, and a few others at the same apartment. 

The final and third meeting took place on Sunday.  That included Miftah Ismail, Marriyum Aurangzeb, and Malik Ahmed Khan. It’s this meeting where the decision was taken that Dar would accompany PM Shehbaz to Pakistan and take oath as finance minister of Pakistan.

Ishaq Dar returned to the country after five years in self-imposed exile in the United Kingdom. He is a former Minister for Industries and Investment and Minister for Commerce during Nawaz Sharif’s presidency. He left the country when corruption charges were brought up on him. Now he has been brought back exonerated without any investigation by the PM himself with a new role in the government. Within hours of taking oath he told the media that he had his eyes set on putting the falling economy back on track. 

Finance Minister Ishaq Dar has vowed he would rein in inflation and lower interest rates. This means the SBP does not need to be aggressive in the future.