For Pakistan, selling State Owned Enterprises (SOEs) is not a choice, as it is the prescription which Dr IMF has ordered. Finance Minister Muhammad Aurangzeb had readily agreed to fall in line in order to get the booster dose from International Monetary Fund (IMF). To revive the economy, which is gasping for breath on the ventilator and which he has been mandated to look after. There is one major problem, though: Deputy Prime Minister Ishaq Dar who vetoed what Aurangzeb said.
A couple of days ago, Aurangzeb had declared that the government has no reason to keep bearing losses by way of holding SOEs and will divest all entities held by it. His statement was meant to signal to the IMF team now in Pakistan that the government was serious about economic reforms. The first reform to be implemented was divesting government’s equity in SOEs and leaving them in private hands. Immediately thereafter, Deputy PM Dar contradicted Aurangzeb saying that no final decision regarding divestment has been taken as yet.
There is thus a clear divide that exists on economic policymaking, and a tussle is on between Aurangzeb and Dar. This was something that most doomsayers had predicted the day Dar became Deputy PM when Prime Minister Shehbaz Sharif was away on a visit to Saudi Arabia. The prediction was that Dar will now act as super Finance Minister and Sharif’s efforts to keep him away from interference in financial matters will fail.
PM Shehbaz has tried to send mixed signals as he has declared that all SOEs, except those of strategic importance, will be sold. By his statement, Shehbaz has tried to keep Dar and Aurangzeb, two of his cabinet colleagues, from getting entangled in a public brawl. The PM’s deft handling has avoided an open confrontation between Dar and Aurangzeb from breaking out immediately. But this is something that can happen any time if the two happen to be together ever!
Incidentally, Dar is a confidant of Nawaz Sharif, the elder brother of PM Shehbaz, and holds the view that all out privatisation will harm his party PML-N politically. The high inflation, bungling in wheat procurement, agitation in Pakistan Occupied Jammu Kashmir (POJK) and such other challenges have already made PML-N a hate object. Possibility of an agitation by workers likely to be impacted by government’s privatisation move is something that cannot be ruled out. As such, Dar’s cautious approach has won the day.
One thing is clear that PM Shehbaz is in the role of a fire-fighter trying to douse fires lit by Aurangzeb and Dar on the issue of privatisation. Aurangzeb had outright rejected Dar’s terming of many government owned industries as “strategic and essential SOEs’’. Aurangzeb had declared at a pre-budget meeting that there is “no such thing as strategic SOEs’’ and that all SOEs would be sold to private players.
Incidentally, Dar’s stance has prevailed as PM Shehbaz has endorsed his categorisation of “strategic and essential SOEs’’. That Aurangzeb will have to go by Dar’s dictates is also clear from the fact that the latter heads the Cabinet Committee on Privatisation. Initially, the Finance Ministry, headed by Aurangzeb, had prepared a list of SOEs to be privatised in the near future. However, when this list was seen by Dar, he removed seven profitable companies from it, which will continue to be in the hands of the Pakistan Sovereign Wealth Fund. Dar has declared that more companies will be taken out of the ambit of the privatisation move.
In this tug of war between Finance Minister Aurangzeb and his Deputy Dar, PM Shehbaz has, for the time being, sided with Dar. But Shehbaz may soon see his luck run out as the negotiations with IMF for the next bailout package progress. These negotiations are being led by Aurangzeb, but he now knows clearly that his hands are tied by an invisible rope, the end of which is in Dar’s hands.
It needs to be mentioned here that Aurangzeb was a successful banker working abroad and drawing a handsome salary. He was cajoled into giving up his job and becoming the Finance Minister of Pakistan on the promise that he will be given a free hand. Aurangzeb gave up his Dutch nationality to become the Finance Minister two months ago. Senate member Asif Kirmani, a businessman considered close to Nawaz Sharif, had criticised Aurangzeb’s appointment, saying he was an “establishment pawn’’ (read backed by the military establishment).
The PML-N had helped Aurangzeb get elected to the Senate within a week of his assuming the charge of Finance Minister. Incidentally, Aurangzeb is drawing honorariums, equivalent to four salaries for top bureaucrats working in the Prime Minister’s Office (PMO). This contrasts sharply as many of his cabinet colleagues, including PM Shehbaz, who don’t draw any salaries from the exchequer. Dar was Finance Minister of Pakistan four times in the past and it is just first such outing for Aurangzeb.
After PM Shehbaz’s announcement, it is now clear that the privatisation of all SOEs as envisaged by Aurangzeb is not happening any time soon. The Finance Minister will now be fighting all his battles with one hand tied behind his back, courtesy Dar.
