Pakistan's newly elected Prime Minister Shehbaz Sharif has selected a former JPMorgan Chase banker as finance minister to shore up the cash-strapped economy after a contentious election.
Muhammad Aurangzeb, 59, has been appointed to the position, the Ministry of Finance confirmed in a post on X. He had earlier resigned as chief executive officer of Habib Bank, Pakistan's largest depository bank.
The new finance minister's most pressing challenge will be securing at least $6 billion in loans from the International Monetary Fund to tide over an economy battered by soaring inflation and slowing growth. Shehbaz Sharif said Pakistan needs to secure new loans as a priority.
The country also needs to release the final $1.1 billion tranche from the IMF program, which ends next month. About $1 billion of Pakistan's dollar-denominated bonds also mature in April.
Aurangzeb was chosen over other candidates, including Sharif's longtime ally Ishaq Dar and former central bank governor Shamshad Akhtar. His appointment suggests Mr. Sharif wants technocrats to help rebuild the country, which narrowly avoided default on its sovereign debt last year.
After appointing the cabinet, Prime Minister Sharif said, “Antibiotics will not work at all, so surgery will have to be performed. A thorough surgery will be carried out to further deepen the roots of this country.When there is a will. There is always a will.” That's the way to go, and it's never too late. ”
Aurangzeb, former CEO of JP Morgan's Global Corporate Bank in Singapore, is an experienced banker who has led Habib Bank for the past six years. He said last year that the new government needed to address structural indicators set by the IMF to move the economy into growth mode.
Still, Mr. Sharif has experience as prime minister of closing deals with multilateral financial institutions. A US Institute of Peace report released after the election said he had personally negotiated with IMF Managing Director Kristalina Georgieva, sidelining former Finance Minister Ishak Dar, who had stalled on some reforms. .
Ankur Shukla, an analyst at Bloomberg Economics, said Sharif has a track record of implementing reforms, and returning for a second term would increase his chances of winning a new IMF package. Shukla said in his report that the party's election promises, including reducing the fiscal deficit and correcting the current account balance, were consistent with the IMF's goals and in some cases were even more ambitious. .
IMF aid will help maintain support from creditor countries such as Saudi Arabia and the United Arab Emirates, which have poured billions of dollars into the country.
Pakistan is still rewarding investors who pour in money. The country's dollar debt has risen almost 25% this year, making it the largest in Asia. The currency rose about 1%.
Despite the new appointments, some observers remain pessimistic.
“Even if you bring in legendary figures like Larry Summers and Rubin, they can't do anything,'' said former IMF economist Nadeem-ul-Haqueh. There are deep-seated issues that need to be resolved.” Changing people and his IMF program are just window dressing. ”
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