Country needs a full time Finance Minister (March 15, 2010) Business Recorder

Why is it difficult for political parties to find a good finance minister from within their respective rank and file? Why they have to engage technocrats from outside and be stuck once Citibank runs out of its list of ‘Shaukats,’ as one letter to editor said the other day? Such questions are being posed at the evening parties these days. Yes the country may be able to get the next tranche of foreign aid, but absence of a finance minister at this juncture is psychologically bad for the prickly economic environment.

The government knew it well in advance last month that Shaukat Tarin is bowing out of the finance ministry as well as from the Senate, but so far it has not been able to find an alternate from within the ruling party. A number of names are being considered and most of them are again non-party technocrats and economists. But it seems that there is strong lobbying within the party for this coveted position which is second to the prime minister in the cabinet.

In the last two PPP governments in the nineties Benazir Bhutto kept the finance minster’s portfolio to herself  and was backed by an experienced civil servant V.A. Jaffery as an adviser. For representing the ministry in the parliament she had a minister of state who had little understanding about the complicated financial matters. It was only in the last days of her second stint in 1996 that she entrusted the ministry to Naveed Qamar, perhaps the most deserving candidate for finance ministry in the PPP even today. The present government also tried him as a stop gap arrangement before they got the position vacated for Ishaq Dar to please PML (N). Dar had previous experience of serving in the same position for a few months in the last PML government, which was ousted by Musharraf in 1999. Shaukat Aziz was a successful finance minister owing to the full support of General Musharraf and his ability to steer through the rough waters. He also made the mistake by keeping the portfolio to himself when he was elevated as prime minister. This resulted in delaying many important decisions and political compromises in the last two years, and that was one of the many external and internal reasons for the economic meltdown. The one that was inherited by the PPP-led coalition.

Most of the technocrat finance ministers since the eighties barring Ishaq Khan, who was the de facto prime minister under General Ziaul Haq, had uneasy relations with their politician colleagues in the cabinet and parliament. A finance minister in Pakistan is very powerful because he heads all the major economic committees of the cabinet. It is therefore his unpleasant job to remind his colleagues what is financially doable and veto what is not possible in an economy that is run on a shoe-string budget and borrowed money.

According to Shaukat Tarin the former technocrat finance minister one of the major predicaments of every person in his position is to deal with the strong lobby that represents the agriculturist. “You see 65% people in this country live in rural areas and are attached to an agrarian economy, it is this class which does not allow levy of agriculture income tax but wants all the subsidies,” he complained. “And when you try to reduce their subsidies, he continued, or talk of levying taxes, this lobby resists such moves tooth and nail.” The argument in support of taxing agriculture income is based on the fact that now when the support prices of all the major commodities are almost linked to international prices, there is no reason that the agriculture sector that contributes 21% of the GDP is not taxed. “At present,” Shaukat Tarin said “fertilizer, electricity and water are heavily subsidised to the agriculture sector. Water is becoming a scarce commodity but the farmers are paying only 20% of the maintenance cost of water courses. Any new investment in improving the irrigation system has to come from government revenue budget.

It is this political lobby which has always given a tough time to all technocrat finance ministers like Sartaj Aziz, Mahbubul Haq, Shaukat Aziz, Salman Shah and Shaukat Tarin. But gentleman Sartaj Aziz says he could deal with his other colleagues because he had worked with them for four years as agriculture minister in the past. But when he was finance minister, it was an open secret that other politicians of his party were critical of him and lobbied to get him out. That is the reason that his next assignment was of foreign minister.

Both Aziz and Tarin think that it is not necessary to have a technocrat as a finance minister. Sartaj Aziz says an elected politician if he/she understands finance and economics can be the finance minister. Now that is a big fat “IF.” Why? That is explained rightly by Tarin who says that there are no think-tanks working for the political parties in Pakistan, who could back up the politician finance minister. Even the party manifestos, he says are prepared by some individuals and the rest of the leaders do not take the ownership. He is right because in our under-developed political culture party manifestos are just a ritual document. Party manifestos are written by party intellectuals without getting any input from the experts on the feasibility of the promises. The institution of shadow minister, which is useful in a democratic polity, is also missing in the political parties. Think-tanks and shadow ministers institutions prepare the parties and groom political leaders for important jobs like finance minister. So there is no effort on the part of the political parties in grooming their leaders for the important ministries where understanding of the technical issues is required.

In the present context reports are that Prime Minister Yousuf Raza Gilani is considering to follow his leaders’ policy of keeping the finance minister’s portfolio to himself. These reports say he would enlist a technocrat from outside as an adviser – the tie is between a brilliant economist Hafiz Pasha and a competent asset manager Naseem Beg. Trouble with Pasha is he can’t be very pliable to the political populist demands at the cost of an economic rationale. The brunt of facing the parliamentarians and rigours of reading the budget speech would rest with the lady state minister for finance. Now this would be a big mistake. Prime Minister’s job in the present circumstances is too busy so he would not be able to give a fair time to the important economic issues. Already many important decisions, which cost the nation billion of rupees, are delayed. To me delays in making important economic decisions are as equal a crime as corruption, if not more. Nobody has worked out the cost of delayed decisions I can bet, it is more than the cost of corruption in this country. For instance, delay in the approval of new power projects in Shaukat Aziz’s tenure and white oil pipeline during Chaudhry Nisar’s stint as a petroleum minister must be hundreds of billions of rupees. So, Mr. Prime Minister please have some full time finance minister with authority, the country’s economy is too shaky to be managed by a part time finance minister. And the internal and external problems are too many to be attended by an ambitious part-time chief executive. (ayazbabar@gmail.com)

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