File photo of former finance minister Miftah Ismail
Prime Minister Shehbaz Sharif’s younger son, Suleman, last week described the “last 3 finance ministers” as “jokers,” accusing them of laying “minefields” for incumbent Ishaq Dar. While he did not name anyone, it was presumed he was referring to Hafeez Shaikh and Shaukat Tarin of the Pakistan Tehreek-e-Insaf (PTI)-led government and Miftah Ismail—of his own Pakistan Muslim League (Nawaz). This was not appreciated by anyone, including some within the PMLN, and Suleman sought to backtrack by claiming he was referring to the PTI’s 3 finance ministers—Tarin, Shaikh, and Asad Umar.
Nonetheless, his remarks drew backlash, with PMLN leader Shahid Khaqan Abbasi carefully saying it was inappropriate to blame Miftah, who has been in a public row with his successor Dar since even before the latter returned to Pakistan after years of self-exile in London. Not helping Suleman’s narrative is the non-performance of Dar since assuming office, with the Pakistani public seeing little from him apart from bursts of anger over rumors of a looming default.
In a spree of op-eds since his ouster, Miftah has confirmed that Pakistan owes the world about $100 billion, $21 billion of which has to be repaid in the ongoing fiscal year. Over the next three years, the country must repay about $70 billion. With the state of Pakistan’s economy, it is inevitable that these payments will be made by securing new loans, perpetuating a cycle of debt that will persist without a focus on increasing exports and achieving a current account surplus. “Then and only then will we be able to pay back the world without borrowing from someone. But until then we are in a tight spot,” says the former finance minister.
There is little distinction in Miftah’s revelations, as it has become routine for politicians out-of-favor to suddenly discover solutions to all that ails Pakistan. However, his frank disclosures do offer some insight for the general public. He notes that Pakistan’s need for foreign exchange soared after 2002 to finance its current account deficit, with its accumulation increasing overall debt annually. “Remember, because we don’t run current account surpluses, and hence never earn net foreign exchange, we only borrow foreign exchange from one source to repay another and our debt is never repaid and only grows,” he wrote, summarizing what all Pakistanis are already aware of.
Unfortunately for Miftah, his time in the Finance Ministry was always numbered, as the “tough” decisions he had to take required a scapegoat for the PMLN’s declining political capital. This was already evident during his time in office, when Maryam Nawaz publicly criticized his imposition of taxes on traders, triggering a reversal that no economist can stomach.