Pakistan’s new administration has appointed a close supporter of Prime Minister Shehbaz Sharif and his family as finance minister ahead of critical meetings with the International Monetary Fund.
Miftah Ismail previously worked as an economic adviser to three-time Prime Minister Nawaz Sharif, the present Prime Minister’s older brother. Ismail, along with the rest of the government, is expected to be appointed within 24 hours, according to one of the persons.
The administration, established by an alliance of different political groups that ousted former cricket star Imran Khan, is still negotiating portfolio distribution and no final decision has been reached, according to the persons.
Ismail, who served briefly as finance minister between 2017 and 2018, will be among the individuals tasked with negotiating with the multilateral lender to restart a program that was jeopardized when Khan abruptly lowered energy costs, despite an agreement with the lender to the contrary.
He will oversee an economic team that must also contend with Asia’s second-fastest inflation rate and dwindling foreign exchange reserves that now cover only a couple of months’ worth of imports. The central bank of the country has already boosted interest rates to their highest level since 1996 in an attempt to alleviate the problem.
Ismail declined to comment on his probable appointment, and Marriyum Aurangzeb, the ruling party’s spokeswoman, and the Prime Minister’s Office did not immediately reply to calls for comment.
On Wednesday, party leader Maryam Nawaz published a photo of Ismail sitting close to Shehbaz Sharif on Twitter, indicating that he is on the verge of securing the finance chief position.
Ismail also spoke at a news conference convened hastily by the Finance Ministry on Tuesday. He told reporters that inflation could not be swiftly contained due to the Khan government’s “flawed policies.” The first step, he said, was to talk with the IMF and persuade them to reduce the stringent requirements so that the government could deliver relief to the people.
At the moment, the government has not determined whether to increase fuel prices, which is a necessary condition for IMF funding.
Pakistan is under pressure to eliminate subsidies on energy prices, which would result in a rise in the cost of power and fuel. It will also have to rein in excessive revenue expenditure, which is generally seen in the run-up to elections in South Asia until the IMF program expires in September, at which point polls are expected to take place sooner rather than later.
“Ismail has a brief history of engaging in expansionary fiscal policy. We were operating at a significant deficit. What was Ismail’s strategy leading up to the elections? He further reduced personal income taxes,” said Zubair Ghulam Hussain, chief executive officer of Insight Securities Pvt, referring to the politician’s tenure as finance minister during the administration of then-Premier Shahid Khaqan Abbasi.
“The issue here is that the economy requires severe fiscal policy decisions that would have political repercussions in the run-up to the elections. They may avoid a handful of them,” Hussain explained.