Our finance czars

Published April 18, 2023
The writer is a political economist with a PhD from the University of California, Berkeley.
The writer is a political economist with a PhD from the University of California, Berkeley.

FINANCE czars are often the top regime honchos after prime ministers and play key roles in national progress. How have our czars done? I look at four czars who served for at least one year after 2008: Shaukat Tarin (two years in two stints), Hafeez Shaikh (five years in two stints), Ishaq Dar (five years in two main stints) and Miftah Ismail (a year in two stints).

We first had Tarin and Shaikh under PPP, followed by Dar and Ismail. We then had Shaikh and Tarin again, but in reverse order, and Ismail and Dar again (in reverse order too). This odd merry-go-round was broken by a few short eras of others. Thus, our many ills and few gains since 2008 have come mainly from these four.

Shaikh has a PhD in economics from Boston University, and Ismail a doctorate in public finance from the prestigious Wharton School. Both have worked at IMF and have the strong global economic credentials needed for the job (but with a neoliberal bent). Dar and Tarin only have business degrees and national job records.

However, the real test is their work as finance ministers. Their short stints make such a review hard. Exogenous factors and other public officials affect economies too, especially beyond the fiscal realms of finance czars. But fiscal policies affect the whole economy. Our czars usually control trade, investment, and even monetary and exchange rate policies informally. So, I isolate their role from exogenous factors in not only the fiscal sector but also in the areas of sustainable, equitable growth and reforms.

The short stints of four FMs make a review difficult.

Shaikh in both stints had to contend with the worst exogenous factors (2008 crisis, 2010 floods, terrorism, electricity crisis, high oil prices, Covid-19, etc.). Dar saw terrorism and electricity crises in his first stint and the Russia-Ukraine war, floods, and Tarin’s economic mess (which he exacerbated) in his second. Miftah Ismail inherited economic messes from Dar and Tarin. The latter had bad exogenous factors in his first stint but received a recovered economy in 2021.

Going by key indicators until 2022, Ismail does the best, followed by Dar, Shaikh and Tarin on GDP. Dar does the best, followed by Ismail, Shaikh and Tarin on inflation, and also on fiscal issues, followed by Ismail, Tarin and Shaikh. Shaikh does the best on external deficits, followed by Dar, Ismail and Tarin. Both Ismail and Dar do better than Shaikh and Tarin on debt. Overall, the PML-N czars do better, but this status will change once the full 2023 data is in. Also, the exogenous factors here explain some of the variances; a conclusive verdict based on data alone is hard to give.

So, we must review their policies. The seventh NFC Award and BISP came under Tarin, but were not his ideas. Ehsaas came under Shaikh, but was not his brainchild. CPEC was Dar’s work, but it hasn’t lived up to its promise. Ismail and Shaikh mended broken economies partially. So, it is hard to list many big pluses for any, which is why we have fumbled economically under them (the pre-2008 eras had their own issues). The only area where one can clearly rank them is on avoiding harm. While Dar and Tareen are responsible for the larger crises, Ismail and Shaikh mended them. This brings us back to my starting point credentials. The two with the best ones caused the least harm. But both were dumped by the PML-N and PTI for the two who did the most harm. Ismail has shown more guts, sincerity and flair in advocating reforms on the job, but more so in his writings later. He ranks as the best among the four for me.

Dar and Tarin ran elitist economies, with the state favouring unproductive, rentier classes. The other two favour reforms, but neoliberal ones; where the state plays no major economic role, good or bad, beyond giving macroeconomic stability, rule of law and a ‘free’ economy. But that model globally results in crises and inequity. We need neither type of state, but one that mixes the East Asian developmental model igniting progress, with the Scandinavian welfare one to ensure good incomes for the vast majority that can work and safety nets for the few who can’t.

Nothing in his writings shows that Ismail embraces such ideas. However, he seems open to debate, and it is worth nudging him onto this path. At the end of the day, though, one needs not only an able finance minister, but also able ministers for investment, trade, industry, planning, climate change, poverty alleviation, health, education, etc. The only way a team even remotely resembling a dream team can attain power soon until the grassroots parties expand is if the PDM follows the Congress model, where family patriarchs run parties and appoint able persons to govern.

The writer is a political economist with a PhD from the University of California, Berkeley.

murtazaniaz@yahoo.com

Twitter: @NiazMurtaza2

Published in Dawn, April 18th, 2023

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