A former State Bank of Pakistan Governor with extensive experience in multilateral institutions, the caretaker Finance Minister Dr Shamshad Akhtar, has the relevant qualifications and experience, though she has held no ministerial position in the past, to meet the challenges facing the Pakistan economy. Her mandate however is limited by the constitution and Elections Bill 2018 clause 230 stipulates that she can only (i) attend to day to day matters necessary to run the affairs of government, and (ii) be restricted to activities that are routine, non-controversial and urgent and in public interest and reversible by the future government. As a caretaker, she cannot (i) take any major policy decisions except on urgent matters, (ii) enter into any major contract or undertaking if it is detrimental to public interest, or (iii) enter into any major international negotiation with any foreign country or international agency or sign or ratify any international binding instrument except in an exceptional case. This implies that the caretakers do not have the mandate to go to the International Monetary Fund or any other multilateral/bilateral source for additional funding than has already been procured by the outgoing PML-N government or take any measures with respect to imposing or withdrawing taxes, and adjusting current or development expenditures.
However, clause 230 notes that a caretaker set up is allowed to take decisions in exceptional cases and in the public interest. First off, she would have to look at Pakistan Bureau of Statistics data and assess how credible/realistic it really is. However, she has the advantage of accessing alternate data tabulated by well-known economists. There is no doubt that the Pakistan economy is in an exceptionally poor state with the budget deficit for the current year projected to be as high as 8 percent if the government data is rationalized, rather than the Abbasi-led administration’s unrealistic claim of 5.8 percent, which is unsustainable. The current account deficit notwithstanding, the claims by the PML-N government that ended its tenure on 31 May, would be in excess of 30 billion dollars while the debt to Gross Domestic Product ratio is close to 75.3 percent instead of the government claim of 61.6 percent subsequent to redefining debt by the government and; foreign exchange reserves are less than 11.4 billion dollars, with State Bank of Pakistan having borrowed 6.2 billion dollars from commercial banks. In other words, these statistics indicate that measures that would douse the raging fire in the economy are urgently required which may well be in the public interest.
Dr Akhtar would have to decide whether to grant an extension to the amnesty scheme announced by the Abbasi-led administration which is due to end on 30 June, projected to generate around 5 to 6 billion dollars, but which remains stalled due to the suo motu notice taken (on foreign assets) by the Supreme Court prompting investors to adopt a wait and see approach. Furthermore, of the three options available in the scheme for declaration of foreign assets the one relating to investment in bonds has the most potential to boost our forex reserves. The rules pertaining to the bonds have not been announced as yet. Once these impediments are removed then to make a success of the scheme it would need to be actively projected through advertisements and other marketing tools to obtain desired result. It would therefore be desirable that she convince the cabinet that the date be extended through a presidential ordinance. Be that as it may, as a long-term staff member of multilateral institutions that are generally against amnesty schemes, Dr Shamshad Akhtar may not be convinced that it needs to be extended, however, the dwindling foreign exchange reserves may become a compelling reason to extend it.
One critical event where Dr Akhtar is eminently capable to play a very positive role because of her rich experience is representing Pakistan in the Financial Action Task Force (FATF) meeting scheduled for 25 June. It is unclear whether the PML (N) government undertook the necessary measures to ensure that Pakistan is not placed on the black list; however, she would need to carefully review all measures taken and the pace of their implementation before she proceeds to attend that meeting.
To conclude, Dr Akhtar faces an extremely challenging task made all the more difficult because any fire fighting measures she recommends to the cabinet are likely to be interpreted along partisan lines with elections less than two months away. However, she has accepted the challenge and this newspaper expects that she would be up to it.
