Pakistan’s new prime minister has appointed 57-year-old economist and businessman Miftah Ismail as the finance minister who will be tasked with quickly arresting a downward economic spiral and getting IMF talks back on track.
Ismail, who briefly held the post four years ago, brings with him a record of decisive policy action and a close relationship with Prime Minister Shehbaz Sharif but faces a daunting array of challenges, from falling foreign currency reserves to soaring inflation and potentially historic deficits.
He will have limited time to act, with a maximum of 15 months before general elections are due, while they may be called sooner.
The former IMF economist, with a PhD in Public Finance and Political Economy from the Wharton School of Business, held the job for a few months in 2018 when he joined a government near the end of its term.
In that short period, Ismail scrapped costly government exchange rate controls and gave the Pakistani rupee more flexibility, while cutting income taxes as part of a growth promotion policy.
As he returns to the post, central bank foreign reserves have fallen to $10.8 billion from $16.2 billion in just one month, according to the latest figures released on Thursday, providing import cover of only around 50 days, Ismail said.
To rebuild reserves, he is considering pushing for more deposits from friendly countries such as China, Saudi Arabia and the United Arab Emirates, sources in the ministry have said. All of those countries have parked funds in Pakistan’s central bank that will need to be rolled over.
He will also prioritise securing a successful International Monetary Fund review to release a tranche of more than $900 million and unlock finances from other international lenders that require a clean bill of health from the Fund.
Ismail has said he intends to restart talks soon to resume the 39-month, $6 billion bailout programme, which Pakistan entered in 2019, but negotiations will be tough with many targets off track.
