The Pakistan Muslim League-Nawaz (PML-N) is all set to apply the Ishaq Dar formula to turnaround Pakistan’s debilitating economy. There is every possibility that former Finance Minister Ishaq Dar will take the oath of the Finance portfolio today. For weeks, there has already been speculation that incumbent Finance Minister Miftah Ismail would be replaced by Dar. The PML-N leadership was publicly attacking and disowning policies of incumbent Finance Minister Miftah Ismail, in particular, the inevitable reversal of the costly fuel subsidy introduced by the previous PTI government. So the matter of induction of Mr. Dar into the present cabinet is a matter of hours now. All hurdles to his safe return have already been removed. The NAB ordinance has already been amended while the accountability court has also suspended an outstanding arrest warrant against Dar, paving the way for the former finance minister’s return from London, where he has been living in ‘self-exile’ for the past five years or so.
The change of command will come at a time when the country faces one of its worst economic crises, worsened by an unprecedented devaluation of the currency. Other challenges that are hitting hard country’s poor economy, include a political turmoil, shrinking cash reserves, record high inflation, ballooning circular debt and last but not the least compliance with the tough IMF conditions.
Undoubtedly, it is an uphill task to deal with these economic crises, but a track record of Dar’s performance vouches for his capability that he can put the country’s economy on the right track. He had already tackled the challenge of increasing dollar price and was able to restrict the value of a dollar equal to one hundred rupee back in 2013. Now, in 2022, the incumbent government is once again going to rely on his economic policies. The practical approach of Mr. Dar in dealing with economic matters and his friendly relations with Saudi Arabia as well as his good dealing with the IMF can bring a change. Soon after confirmation of his return to Pakistan, rupee has already posted a strong recovery and the Stock Exchange Marketing is also showing positive trend.
These are good signs, but Mr. Dar will have to introduce a practical plan for the economic revival after the recent flash floods. Besides the rehabilitation of flood victims, another big challenge for the government is to service the loans that the country already has taken. To get out of this debt trap, the government will have to develop a plan to boost development and trade to strengthen the economy. To achieve true economic stability, Pakistan will have to become self-reliant, which is a long-term prospect in any case. However, the foundation for an economically sound future has to be laid now. Another big challenge is the continuing of energy crisis that has crippled the industries that supply Pakistan’s exportable goods. The textile industry in particular is on the verge of total collapse, which is alarming because textiles are still Pakistan’s major exports and the backbone of the economy. Its imminent collapse threatens agriculture (cotton growing) upstream and exports, the trade balance and balance of payments downstream. The new finance minister will have to prioritize these sectors for a quick turnaround in the economy.