Minister of State for Finance Rana Afzal told a foreign news agency that Pakistan “will start meeting on the issue of Financial Action Task Force (FATF) after March 1 to see what we can do on this and what strategy we can devise.” The de facto Finance Minister of the country, Miftah Ismail, with the title of Advisor to the Prime Minister on Finance, Revenue and Economic Affairs with a status of a federal minister, the most vocal amongst the four members of the top executive engaged in diplomatically defending Pakistan’s stance, dismissed concerns that placing Pakistan on the grey list would negatively impact on the country’s growth and accused the United States of seeking to “embarrass” Pakistan. If this was indeed the US’ objective then economists argue that dollar remittance inflows, which are directed through SWIFT mechanism operated from the US, may well suffer delays and/or a decline.

The other three federal ministers engaged in defending Pakistan’s stance included: (i) Khawaja Asif, the Foreign Minister, who is being accused of jumping the gun by revealing that China and Saudi Arabia would support Pakistan being placed on the grey list just before the meeting which subsequently led to the withdrawal of their support; (ii) Sardar Awais Mohammad Khan Leghari, Minister for Power, visited some Far Eastern countries but failed to garner any support; and (iii) Ahsan Iqbal, Interior Minister and the Minister for Planning, Development and Reforms, whose visit to the US and the UK was not fruitful as these two countries were in the forefront of the move to place Pakistan on the grey list.

Ismail failed to convince the 37-member FATF not to place Pakistan on the grey list in spite of the fact that, according to him, Pakistan had met most of the conditions, including proscribing Jamaat-ud-Dawa (JuD) and Falah-i-Insaaniyat Foundation (FIF); however, procedure was not followed as while the Asia Pacific Group was in the process of evaluating Pakistan’s report the US and the UK submitted a letter to the FATF nominating Pakistan for placement in the grey list. Ismail’s supporters claim that his ‘offensive posture’ against the US prompted the two-day visit of Senior Director for South and Central Asia at the US National Security Council Lisa Curtis; however, the official statement released by the US Embassy repeated the old mantra: “Ms Curtis urged the government of Pakistan to address the continuing presence of the Haqqani network and other terrorist groups within its territory and reiterated the international community’s long standing concern about ongoing deficiencies in Pakistan’s implementation of its anti-money laundering/counter terrorism finance regime.”

As is the usual practice with the incumbent administration, there is little clarity on Pakistan’s current status. There is ambiguity on whether Pakistan is on the grey list at present with Ismail recently stating that Pakistan should consider that it is on the grey list while informed sources in the Foreign Office maintain that Pakistan is currently not on the grey list but would be on that list from June onwards. Some senior government officials have indicated that if FATF remains dissatisfied in June 2018 with either the strategy (developed with the cooperation of APG and International Cooperative Review Group) or its implementation, Pakistan may be placed on the black list.

The question today is if Pakistan is placed on the grey list what exactly would be the impact on the economy? Ismail reckons there would be little if any impact on growth while Rana Afzal, the Minister of State for Finance, claimed that because the government was focused on FATF issue, sales tax refund payments of 60 billion rupees could not be released to exporters by 15 February as promised. This is a matter of concern as it implies that as the de facto Finance Minister was engaged elsewhere no one else was empowered to take the decision to clear the refunds.

To conclude, FATF deliberations on Pakistan have already isolated us in the comity of nations, barring Turkey and our narrative has, once again, been rejected. To argue that this isolation will have no impact on the economy is wishful thinking and one can only hope that the government takes this issue seriously and, given that it will end its tenure on 5 June this year, the need is to take on board all major political parties before embarking upon any strategy.