Pakistan's Finance Minister Muhammed Aurangzeb.
Credit: X/@Financegovpk
Days after PML-N's Shehbaz Sharif took charge to become the 24th Prime Minister of Pakistan and appointed Muhammad Aurangzeb as the Finance Minister of the country, the newly-appointed minister and former banker finds himself facing a daunting task: to negotiate terms with the International Monetary Fund (IMF) for extending funding facilities to the South Asian country.
Pakistan is currently starring at a major economic crisis as the nine-month-long $3 billion loan agreement it signed with IMF is set to expire. The newly elected coalition government has now been tasked to unburden the country of external debts of around $130 billion, which according to a report by Aljazeera, is a third of Pakistan's GDP.
Who is Muhammad Aurangzeb?
A graduate of the Wharton Business School at the University of Pennsylvania, Aurangzeb is a seasoned banker, who, over the course of his long career, worked with global lenders such as Citibank, the Royal Bank of Scotland, and JP Morgan, among others.
In February 2018, Aurangzeb was appointed as the president and CEO of Habib Bank Limited (HBL), Pakistan's biggest lender in terms of deposits.
Over his six year stint at HBL, Aurangzeb made quite the mark, increasing HBL's customer base from 12 million to 36 million, and becoming one of the highest paid CEOs in the South Asian country, with an annual salary of 352 million Pakistani rupees (as of March 2024).
Days after reports on his annual earnings came out, Aurangzeb was named the Finance Minister.
Aurangzeb tasked with handling ballooning loans
Pakistan was supposed to repay loans worth $24 billion by June 2024, but it has for now managed to secure some relief from bilateral creditors through rollovers. Under the revised repayment structure, the country has to pay around $5 billion by the end of June this year.
Given his extensive experience in handling finance affairs in global banks, experts believe that Aurangzeb's appointment as the Finance Minister is critical for the struggling economy of Pakistan.
Pakistan’s external public debt sharply rose by $1.2 billion in six months to $86.358 billion as of September 30, 2023. Pakistan received total foreign inflows of $3.5 billion in July-September 2023 against loan repayments of $1.5 billion, resulting in a net inflow of $1.97 billion.
While Aurangzeb is indeed seasoned, he is now in charge of the $350 billion economy of Pakistan, but experts believe he will cope.
Aljazeera quoted Sajid Amin Javed, a senior economist associated with the Sustainable Development Policy Institute in Islamabad (SDPI) as saying that Aurangzeb's appointment shows the government's willingness to introduce 'economic reforms'.
“Partially, this may also be a step to dilute the perception that the PDM government could not deliver in the past,” Javed said as he pointed at the coalition that Sharif led briefly after the removal of Imran Khan’s government, and whose brief tenure coincided with skyrocketing inflation.
Karachi-based economist Khurram Schehzad said, “The key point is not necessarily who the Finance Minister is, but rather, what would the person do, what their vision is, and what long-term thinking they are bringing to the table."
“We may see a more reforms-focused engagement with [the] IMF instead of political balancing. Most importantly, he brings fresh thinking on economic policy conduct. Given his global experience, he may go a bit deeper on overhauling of economic policy and country may see a renewed focus on economic growth,” Javed told Aljazeera.
Pakistan's current foreign currency stocks remain at $7.8bn, which is sufficient to fetch the country only about eight weeks of imports. Its currency has devalued by over 50 percent, while inflation, currently at more than 23 percent, shot up to nearly 40 percent in 2023.