ISLAMABAD    -   PML-N senior leader Ishaq Dar is all set to take the charge as fi­nance minister to tack­le economic challenges especially skyrocketed inflation and currency depreciation, which has become a serious chal­lenge for the incumbent government.

PML-N supremo Nawaz Sharif and Prime Minister Shehbaz Sharif in London had decided to appoint Ishaq Dar as new finance minister by replacing Miftah Ismail — who saved the coun­try from possible de­fault after taking tough decisions. However, multi-decades high in­flation rate and all-time high dollar value were annoying Nawaz Sharif and his daughter Maryam Nawaz, which resulted in early de­parture of Miftah as fi­nance minister.

PML-N leaders be­lieved that Ishaq Dar would bring the dollar value to below Rs200. In his previous tenure as finance minister (2013-2017) Dar had not let the local currency to cross Rs100 benchmark through intervening in open market. Howev­er, Miftah believed in free currency market and does not believe in intervening in market to control the curren­cy value. The currency market responded pos­itively on the first day after PML-N decided to appoint Dar as finance minis­ter. Local currency appreciated by Rs2.63 against the green­back in interbank and closed at Rs237.02 on Monday as against Rs239.65. In open market, the local unit has posted a massive recovery of Rs7 and was being traded around Rs238.

Experts are of the view that it would be a great challenge for Ishaq Dar to control the rupee value through interven­tion as the State Bank of Paki­stan (SBP) does not have suf­ficient dollars to be used for currency appreciation. For­eign exchange reserves held by SBP dipped to $278 mil­lion, clocking in at $8.35 bil­lion as of September 16, 2022. On the other hand the inter­national creditors are not re­leasing loans for Pakistan de­spite the country had revived International Monetary Fund (IMF)’s loan programme.

Meanwhile, the IMF would also oppose the decision of in­tervening in the market to con­trol the currency value.

Another challenge for the economic wizard of PML-N would be the tough IMF deal. Dar is the only finance minis­ter in Pakistan’s history who had completed the IMF’s pro­gramme in 2016 after get­ting more than a dozen waiv­ers from the IMF. However, the existing IMF’s loan apparently looks tougher than the previ­ous one as the Fund is not giv­ing many waivers as it did in the past. 

An official who worked with Ishaq Dar in past has informed The Nation that Dar might re­negotiate with the IMF on many issues especially higher petroleum levy to pass on the impact of declining oil prices to masses to control the soar­ing inflation rate. 

The declining oil prices in international market would once again helped the upcom­ing Finance Minister to control the inflation rate, which had skyrocketed to a multi-decade high of 27.3 percent in Au­gust due to the government’s economic decisions includ­ing increasing prices of elec­tricity and fuel as well as cur­rency depreciation. Oil prices in international market have fallen to around $80 per bar­rel, which had gone to around $125 few months back. In his (Dar’s) previous tenure, 2013-2017, oil prices were reduced significantly globally, which forced the then government to reduce the petroleum prod­ucts prices in the range of Rs60 to Rs70 per litre.

On the other hand, Miftah Ismail had paid the price of tough decisions, which were taken to save the country from possible default. Former Prime Minister Imran Khan on February 28 this year had announced to reduce oil and electricity prices by giving massive subsidy and tax am­nesty scheme for industrial­ists, which resulted in suspen­sion of IMF’s deal at the time when Pakistan desperately needed dollars.

Later, the IMF had linked the revival of loan programme with the harsh decisions in­cluding increasing oil and elec­tricity prices. However, Miftah had accepted the challenge af­ter becoming Finance Minister in April this year by enhancing the prices despite strong re­sistance from the party lead­ership and workers.

PML-N vice president Maryam Nawaz Sharif had once said, party supremo Nawaz Sharif “strongly op­posed” the government’s deci­sion to raise petroleum prices. In the tweet, Maryam said that Nawaz walked out of a meet­ing after saying that he “can­not even burden the people with another penny”, and that “if the government’s hands are tied, then I wouldn’t own this decision”. Maryam also dis­tanced herself from the deci­sion, saying that she “stands with the people” and “cannot support this decision”.

However, the tough deci­sions had revived the much needed IMF’s loan programme and getting $1.2 billion from the IMF. On the other hand, the decisions had fuelled the inflation rate in the country.

Miftah had followed the pol­icy of free exchange market, which took the dollar value to all time high, Rs240. For­mer Finance Minister had also arranged massive financing from the multilateral and bi­lateral sources to repay pre­vious loans and build the country’s foreign exchange reserves. The government had arranged financing and in­vestment from friendly coun­tries like Saudi Arabia, United Arab Emirates, Qatar, China and others.