Shaikh’s predicament

Published December 10, 2020
The writer is a member of staff.
The writer is a member of staff.

PRECISELY at a time when the government needs a fully functioning finance chief — whether adviser or minister — it seems the scope of the powers being exercised by Hafeez Shaikh is being chipped away. Coming at a time when the fiscal pressures on the government are growing, talks with the IMF are reaching a crucial stage and the hunger for more resources is rising within the government as opposition pressure ramps up, this is bad news.

Three separate strikes have been scored against the prime minister’s adviser on finance, who also has ministerial powers delegated to him. The first strike was in July of this year, when the prime minister was forced to remove Shaikh as a member of the National Finance Commission award after protests from the chief minister Sindh and particularly after an order from the Balochistan High Court.

This was significant because even as early as last year the government was talking about how the ninth NFC award of 2009 had left the federation short of resources by transferring the lion’s share of revenues from the divisible pool to the provinces.

When the president notified the creation of the 10th National Finance Commission back in May of this year, Sindh Chief Minister Murad Ali Shah objected, arguing a finance adviser cannot be a member and that it contained agenda items that were beyond the scope of the commission as specified by the Constitution (such as expenditures of sub-federating units Gilgit-Baltistan and Azad Jammu and Kashmir, as well as expenditures on public debt).

Three separate strikes have been scored against the prime minister’s adviser on finance.

This letter was sent in May and yet during his visit to Karachi in June, the prime minister pointedly did not meet Shah. Instead, he held a press conference in which he assailed the 18th Amendment and the ninth NFC award, saying they contained “anomalies” that needed to be removed. Regarding the NFC award, he said “what kind of system is this that under it the [federal] government goes into Rs700 billion deficit after paying 65 per cent to the provinces and over security and debt servicing, we start the budget with Rs700bn deficit … this is unfeasible”.

He got his answer only a few weeks later, when the Balochistan High Court ‘set aside’ the presidential notification under which the 10th NFC had been formed, and gently schooled the government on where the real “anomalies” were in the whole affair, and what kind of system the prime minister was required to work under. The court reminded the government of the importance of consensus in proceeding with the NFC, of the constitutional requirement that the share of the provincial governments cannot decrease in any award, and that the Constitution decrees that it be headed by the finance minister, and not a finance adviser.

A month later, a new notification was issued, reconstituting the NFC. Since the post of finance minister is held by Imran Khan himself, he decided to put himself on the commission. This solved the legal problem, but raised another in its place. The NFC is a place where consensus has to be built and the prime minister is not famous as a consensus builder. Rather, he is seen as a divisive figure. Since then, no meetings of the NFC have been held. One of the important pillars of the government’s strategy for clawing back some fiscal space for itself — curtailing provincial transfers — lies in defeat.

Only recently, the Islamabad High Court has gone a step further. It has now decreed that as finance adviser, Shaikh cannot be the chair of the Cabinet Committee on Privatisation, nor any other cabinet committee. “[N]o person can be the Chairman or a Member of the Committee of the Cabinet, who is not a Member of the Cabinet,” the court says in its judgement. “The conferment of status of Federal Minister to an Adviser is again only for the purpose of perks and privileges and the conferment does not make a person/adviser as a Federal Minister.”

So what began with one high court telling the government that an adviser cannot be a member of the NFC has now grown to a point where another court is telling the government that an adviser cannot chair or be a member of any cabinet committee, cannot be a part of cabinet proceedings, does not exercise executive powers, cannot address parliament, and so on.

What does this mean for Shaikh representing Pakistan before the IMF or him chairing or even being a member of the Economic Coordination Committee? It remains to be seen. Most likely a legal workaround will be found, but such workarounds usually make the job more complicated to execute, not less. The biggest case in point in this difficulty is the prime minister announcing that he himself will sit on the NFC, and then being unable to call a meeting of the commission at all.

To top it off, now Shaikh is being summoned by the National Accountability Bureau to answer questions for something that happened almost a decade ago. Lots of other people have grown accustomed to this tiresome ritual. First a NAB notice summoned him on Oct 28, but he was a no show. The second notice summoned him on Dec 1, and again he was a no show. Then the finance ministry put out a short statement, saying no notice has been received by them.

NAB says a payment of $11.1 million was made as “access fee” to a company called M/S Agility, but no software was ever delivered. The probe began in 2015, roping in three former chairmen FBR — Salman Siddique, Abdullah Yousuf and Ali Arshad Hakeem — among a few other officials, and related to the purchase of software from a firm called M/S Agility for automation of customs collection. Agility had gone for international arbitration in 2011, claiming $650m as damages from Pakistan (it was awarded none in a judgement in 2016). But the NAB case is continuing, and it remains to be seen how far Shaikh can avoid getting himself ensnared in it.

The writer is a member of staff.

Twitter: @khurramhusain

Published in Dawn, December 10th, 2020



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