General manager: Asad Umar
Finance is the future, and it doesn’t look too bright. Pakistan’s economy is free falling. The country is on the cusp of crippling debt. In just over two months since the formation of the new government, foreign investment has plummeted, the rupee has taken a nosedive, the stock market is in jitters and prices of utilities including electricity, fuel and gas have swelled. Finance minister Asad Umar says it’s the loss of inheritance, that the previous administration has bequeathed a broken economic engine — one that will take three years to fix and bring on the road again. But this is not what he said before the Pakistan Tehreek-e-Insaf won the elections. Surely, he would’ve known what lay ahead?
Asad Umar of the past is not the embattled finance minister he now seems to have become. He was the one person whose seat and portfolio in the cabinet were always a given. The ‘financial wizard’, with his corporate experience, was to pull the country out of its economic disaster and bring it back from the brink of doom. Except, while he speaks in economic jargon, his prime minister pronounces populism. Cars are being auctioned, buffaloes are on sale and official mansions are snubbed. He seems to realise the questionable utility of these steps for he has not spoken of or partaken in such activities.
Similarly, unlike the prime minister, he has not equated approaching the International Monetary Fund (IMF) to compromising sovereignty. But in the poring over of if, when has become the more pressing concern. The more Pakistan waits before approaching the IMF for a bailout, the more its external deficit will grow. It is already alarmingly high, warns Umar. With the rupee devaluation and more expensive imports, Pakistan’s economy requires urgent course correction. This means cutting down on government expenditure, including subsidies. A probable outcome of this will be the political blowback to unpopular decisions. For a party that has relied heavily on populism to attract attention, this will be a tough undertaking. Is Umar prepared?
His credentials are well known and widely reported. He is the son of Major General Ghulam Umar who worked closely with General Yahya Khan. Umar graduated from the prestigious Institute of Business Administration before embarking on an illustrious corporate career that led him to become the chief executive officer of Engro Corporation at the age of just 43. But depending on who you ask, you will be told a different tale of his successes and failures. His admirers will point to the corporation’s ballooning revenues (from 13 billion rupees in 2004 to 114 billion in 2011), while his critics will highlight the dismal drop in Engro’s shares — largely the result of a fertiliser plant Umar pursued adamantly. But his transition from technocrat to politician seems to have left something amiss, which begs the question: is he really in the driving seat?
Umar being the head of the Economic Coordination Committee, empowered to take the most important economic decisions and generally led by the prime minister, is a good sign. But his authority will not entirely be unchallenged. There are other ministers and advisers with overlapping mandates. Federal Minister for Planning and Development Khusro Bakhtiar chairs the Central Development Working Party which approves large-scale development projects. Information minister Fawad Chaudhry can also often be heard giving policy statements on economy. Then there is the state minister for revenue, Hammad Azhar, and the prime minister’s adviser on austerity, Ishrat Husain. What happens when Umar wants to curtail government expenditure but Bakhtiar wants to initiate development projects, or Husain opposes an expense Umar deems necessary?
Superficial steps will not save Pakistan’s economy. And for concrete ones, political tact will be required. Headline-making accountability that goes after politicians in the opposition will not help the cause. Widening the tax net will need some creative thinking. The government needs to go after big corporations, traders and retailers rather than salaried individuals. In his years working for a large corporation, Umar must have understood how businesses and commercial concerns evade tax or understate revenue. Make them pay, rather than punish a salaried person who already pays income tax but does not file returns. Come clean about belt-tightening measures such as higher power tariffs — instead of blaming past governments, admit to your own limitations. Unless Umar does that, he will throw up more questions than answers.
This article was published in the Herald's November 2018 issue. To read more subscribe to the Herald in print.