Investors pin hopes on ‘Daronomics’ as Ishaq Dar returns to Pakistan as new finance minister

Pakistan's finance minister-in-waiting Ishaq Dar (right) walks upon his arrival at the Nur Khan military airbase in Chaklala, Rawalpindi, Pakistan on September 26, 2022. (PM's Office via REUTERS)
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Updated 27 September 2022

Investors pin hopes on ‘Daronomics’ as Ishaq Dar returns to Pakistan as new finance minister

  • Investors hope Dar will help stabilize rupee, tame inflation, Dar favoured strong currency in previous tenures
  • Dubbed Daronomics, Dar’s approach kept rupee stable between Rs98 and Rs105 against dollar during last stint

KARACHI: Senior leader of the ruling Pakistan Muslim League-Nawaz (PML-N) returned to Pakistan on Monday night, set to become finance minister of crisis-hit Pakistan, with investors pinning hopes that a new era of “Daronomics” would help to stabilize the rupee and tame record-high inflation.

Dar is a member of Prime Minister Shehbaz Sharif's ruling PMLN party and has already been finance minister four times. Dubbed Daronomics, his approach kept the rupee stable between Rs98 and Rs105 against the greenback during his last stint in office from 2013-2017 but he was also widely criticized for deliberately undervaluing the rupee by pumping dollars in the market.  

The Pakistani rupee gained in value by 1.11% or Rs2.63 to close at Rs237.02 against the United States dollar in the interbank market on Monday, and gained Rs6.90 to trade at Rs237.50 in the open market following the reports of Dar’s return. Dar touched down in Islamabad on Monday night and is expected to take charge this week.

While media had reported ex-finance minister Miftah Ismail would remain part of the government’s economic team, the outgoing official told Arab News on Monday: “I will have no role in the government.”

“I will try my best that I can pull Pakistan out of the economic swamp it is trapped in,” Dar told media at the airport after returning to Pakistan from London where he has lived in exile since 2017 when he was disqualified from office by a court in a corruption case.

Dar takes over as the economy faces one of its worst balance of payments crises, and recent floods are estimated to have cost it nearly $30 billion.

Earlier this month, the government cut its GDP growth forecast below 3% from a 5% budgetary target for 2022-23.

“Ishaq Dar is known for keeping the exchange rate stable for stronger currency, that is why the currency market has strongly reacted to his return resultantly the rupee gain some strength,” Samiullah Tariq, Director Research at Pakistan Kuwait Investment Company, said.

Economists said Dar’s return would bring some "comfort" to the currency market and tame increasing inflation, which is at a 47-year high at 27.3%.

“Ishaq Dar is being brought back by the coalition government keeping in view his past track of keeping the exchange rate under control,” Dr Sajid Amin, Deputy Executive Director at the Sustainable Development Policy Institute (SDPI), told Arab News.

“The first priority of the coalition government is to bring stability in the value of rupee as the national currency has fast eroded its value against the US dollar despite International Monetary Fund (IMF) program revival,” he added.

Economists said the coalition government of PM Shehbaz Sharif had paid the political cost of much-needed measures taken by the outgoing finance minister, including the withdrawal of fuel subsidies and fast depreciation of the rupee.

“When the rupee depreciates, the public attributes it to the performance of the economic managers. As a political party this has been the discourse at some level and the decision to bring Dar has been taken in order to show economic performance and improve the image in the eyes of the public.”

The government’s decision to replace Ismail with the Dar reflected the coalition government’s need to immediately “showcase” performance “due to the short time available to the election next year,” Amin said.

“Government wants to go into the election with a new image, with a new market and public feelings that it has improved things … exchange rate and inflation, two key indicators,” he added.

But many economists said Dar’s return would have little effect.

“Changing faces may have limited impacts as we are facing both global and domestic recessions,” Khurram Schehzad, CEO at Alpha Beta Core, a startup investment advisory platform, told Arab News. “Options are limited and the economic situation is challenging. So expecting something extraordinarily different from another person would not be prudent.”

Pakistani industrialists said the incoming finance minister would have to deal with a plethora of issues, chief among them political instability.

“Pakistan is facing a very difficult time at the time when Ishaq Dar is coming back … current account deficit, trade deficit, debt repayments, high inflation, and rupee dollar parity are among them,” Zubair Motiwala, chairman of the Businessmen Group at the Karachi Chamber of Commerce and Industry (KCCI), told Arab News.

“The big problem is political stability ... instability is the mother of all economic evils in Pakistan so he will have to deal with it. Our best wishes are with him and we pray for the speedy improvement of the issues the country is facing right now.”

Pakistan stocks closed bullish with the benchmark KSE100 index settling at 41,151 level, up by 531 points or 1.31%.

“Bullish activity witnessed on strong rupee recovery amid decision over the appointment of a new finance minister, which is likely to stabilise economic uncertainty,” Ahsan Mehanti, CEO of Arif Habib Corporation, said.


After six-year tenure, General Bajwa retires as Pakistan army chief today

Updated 28 November 2022

After six-year tenure, General Bajwa retires as Pakistan army chief today

  • Outgoing chief holds farewell meetings with PM Shehbaz Sharif, President Arif Alvi
  • Will pass baton to successor General Asim Munir at change of command ceremony

ISLAMABAD: Pakistan’s Army Chief General Qamar Javed Bajwa will be retiring today, Tuesday after completing a six-year tenure as head of Pakistan's all-powerful military, which has an outsized role in the governance and foreign policy of the nuclear-armed nation.

A change of command ceremony will be held at the General Headquarters in Rawalpindi on Tuesday morning during which Bajwa will pass the baton to his successor, General Asim Munir, who will become the 17th army chief of the country.

Ahead of the handing over, Bajwa on Monday held farewell meetings with PM Shehbaz Sharif and President Arif Alvi, in which both leaders lauded the outgoing officer's services for Pakistan, particularly in the areas of defense, security, and geo-economics.

“Under the leadership of General Qamar Javed Bajwa, the army demonstrated exemplary services in effectively dealing with various challenges, including the country’s exclusion from the FATF (Financial Action Task Force) Grey List, COVID-19 pandemic, and the recent flashfloods,” the PM office said in a statement. 

“You had the honor of leading the best army in the world.”

In an interview published in an international media outlet on Sunday, Bajwa reiterated the army’s resolve to remain apolitical and, in an apparent reference to former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf party, said that a campaign had been launched against the armed forces because it refused to intervene in politics. 

“Despite some criticism and undue vilification of the armed forces through mass propaganda and meticulously crafted false narratives, the institutional resolve to remain apolitical will remain steadfast,” the outgoing army chief said in the interview.

“I am certain that this political quarantine of the armed forces will auger well for Pakistan in the long term by fostering political stability and strengthening the army-to-people bond.”

The army has ruled Pakistan for almost half of its 75-year history either through coups or as an invisible guiding hand in politics.

Munir's appointment coincides with a dispute between the military and former premier Khan, who blames the army for playing a part in his ouster earlier this year and who has been leading anti-government protests since then.


Pakistan minister heads to Russia for oil and gas talks

Updated 28 November 2022

Pakistan minister heads to Russia for oil and gas talks

  • Trip comes as the South Asian nation struggles to meet domestic gas supply needs as winter approaches
  • Finance Minister Ishaq Dar last month said that Pakistan is considering buying discounted Russian oil

ISLAMABAD: Pakistan's junior oil minister and the petroleum secretary have flown to Russia for talks on issues including oil and gas supplies, two people close to the matter told Reuters on condition of anonymity.

The trip comes as the South Asian nation struggles to meet domestic gas supply needs as winter approaches while battling to contain a current account deficit swelled by energy payments, mostly for oil.

Junior oil minister Musadik Malik did not immediately respond to a request for comment on Monday.

The sources provided no further details, such as the exact agenda, who the Pakistani officials would meet in Russia or when the talks will take place.

Pakistan Finance Minister Ishaq Dar last month said that the country is considering buying discounted Russian oil, pointing out that neighbour India has been purchasing oil from Moscow and Islamabad also has a right to explore the possibility.

Pakistan has been unable to procure Liquified Natural Gas (LNG) from the international market because spot prices remain out of its range and shipments under long-term deals remain insufficient to match rising demand.

With dwindling local gas reserves, the country has begun to ration supplies to residential and commercial consumers. Local media has also reported that oil supplies remain tenuous owing to difficulties in paying for imports.


Ex-PM Khan's party announces it will dissolve provincial assemblies after Saturday

Updated 28 November 2022

Ex-PM Khan's party announces it will dissolve provincial assemblies after Saturday

  • Calls on new military leaders to review policy of carrying 'political dead bodies'
  • Pakistan appointed new army chief, chairman joint chiefs of staff committee last week

KARACHI: The Pakistan Tehreek-e-Insaf party of former Prime Minister Imran Khan on Monday urged the country's new military leaders to review the policy of supporting the coalition government led by PM Shehbaz Sharif, announcing that the Punjab and Khyber Pakhtunkhwa provincial assemblies would be dissolved after Saturday this week to pave the way for general elections.

Sharif last week named General Asim Munir as chief of Pakistan's army, an organisation that plays a hugely influential role in the governance of the nuclear-armed nation. Gen. Sahir Shamshad Mirza was appointed chairman of the joint chiefs of staff committee. 

The PTI has accused outgoing army chief General Qamar Bajwa, who retires tomorrow, Tuesday, of backing the coalition government and helping it come to power through a parliamentary vote of no-confidence that removed Khan from office in April. The army says it does not interfere in politics.

"There is a new dispensation [in the military]," close Khan aide Chaudhry Fawad Hussain said at a press conference after a meeting to deliberate on the PTI's recent announcement that its legislators would resign from the Punjab and Khyber Pakkhtunkhwa assemblies where the party is in majority. 

"The weight of the policies of the last seven months is bending you backwards," Hussain said, addressing the new military leaders. "Our establishment is carrying around the weight of Nawaz Sharif and Zardari's political dead bodies. You will not be able to carry this weight."

He was referring to Sharif's brother Nawaz, a former three time PM and head of the ruling Pakistan Muslim League-Nawaz party, and former president Asif Ali Zardari, who heads the Pakistan Peoples Party. 

"Pakistan's public is expecting that you will change this policy and we will move forward."

At a rally on Saturday, Khan said he was consulting his party on the possibility of resigning from all provincial assemblies in a fresh bid to push for early elections. PTI has already resigned from the federal parliament, but remains in power in two provinces, Punjab and Khyber Pakhtunkhwa, and two administrative units.

Speaking about Monday's meeting where the decision to resign from assemblies was discussed, Hussain said:

“The decision to dissolve both Punjab and Khyber Pakhunkhwa assemblies has been endorsed."

He said KP chief minister Mehmood Khan had already met Khan while Punjab CM Chaudhry Pervez Elahi would meet him on Tuesday.

"On Friday, a session of Punjab's parliamentary party [assembly] has been called and on Saturday a session has been called of Khyber Pakhtunkhwa [assembly]. After both sessions, these assemblies will be dissolved."

Speaking to Arab News, Hussain said the move to dissolve assemblies would force early elections, which has been Khan's main demand since April. 

“A large number of 568 seats will be vacated with dissolution of assemblies and resignations from national and two other provincial assemblies,” he said, adding that the government could not hold by-elections on so many seats. 


Pakistan Taliban end cease-fire, order nationwide attacks

Updated 28 November 2022

Pakistan Taliban end cease-fire, order nationwide attacks

  • TTP agreed to a cease-fire with the Pakistan government in June
  • Both sides have repeatedly claimed the truce was ignored by the other

ISLAMABAD: Pakistan’s Taliban said Monday they have called off a shaky cease-fire agreed with the government in June and ordered fighters to stage attacks across the country.
The Tehreek-e-Taliban Pakistan (TTP), a separate entity from the Taliban in Afghanistan but sharing a similar Islamist ideology, have been responsible for hundreds of attacks and thousands of deaths since emerging in 2007.
They agreed to a truce earlier this year after Afghanistan’s new Taliban rulers took a prominent role in brokering peace talks, but negotiations made little progress and there were frequent breaches.
“We... have shown our continued patience so that the negotiation process is not sabotaged,” the TTP said in a statement.
“But the army and intelligence agencies do not stop and continue the attacks, so now our retaliatory attacks will also start across the country.”
Less than two weeks ago the TTP claimed an ambush that killed six policemen in northwest Pakistan, claiming they were plotting a “raid” on their base in the area.
Since Friday the military has been patrolling the area in an attempt to root out militants, with helicopter gunships shelling their hideouts.
The TTP was founded in 2007 by Pakistani jihadists who fought alongside the Taliban in Afghanistan in the 1990s before opposing Islamabad’s support for American intervention there after 9/11.
For a time they held vast tracts of Pakistan’s rugged tribal belt, imposing radical Islamic law and patrolling territory just 140 kilometers (85 miles) from the Pakistan capital.
The Pakistani military came down hard after 2014 when militants raided a school for children of army personnel and killed nearly 150 people, most of them pupils.
Its fighters were largely routed into neighboring Afghanistan, but Islamabad claims the Taliban in Kabul are now giving the TTP a foothold to stage assaults across the border.
In the year since the Taliban took over Afghanistan, Pakistan has seen a 50 percent surge in militant attacks, according to the Pak Institute for Peace Studies (PIPS).
Lawmakers and business owners in northwest Pakistan have also told AFP that instances of TTP blackmail in the area have increased.
The presence of militants in the area is a deeply sensitive topic for Islamabad, which has long struggled to establish a writ there.
Analyst Saad Khan, a Peshawar-based retired brigadier, played down the significance of the TTP statement saying the cease-fire was barely observed anyway.
“The Afghan Taliban have assured the whole world that they will not allow their territory to be used against any other country,” he told AFP.
“It is important to initiate serious negotiations with the Afghan Taliban on this issue and make them aware of the seriousness of the matter.”


Pakistan vs England Test: English skipper Ben Stokes to donate match fee to flood relief

Updated 28 November 2022

Pakistan vs England Test: English skipper Ben Stokes to donate match fee to flood relief

  • The three-match series, part of the World Test championship, starts in Rawalpindi on Dec. 1
  • PM Sharif thanks English skipper, says “empathy for suffering humanity greatest of all virtues”

RAWALPINDI: English cricket captain Ben Stokes on Monday announced he would donate his match fee from an upcoming Test series against Pakistan to the country’s flood relief efforts to “give something back that goes far beyond cricket.”

The English team is currently in Pakistan to play a three-match series against the host, starting in Rawalpindi on December 1. This is the first Test that England will be playing against Pakistan after a hiatus of 17 years. The second Test will be held in Multan from December 9-13 and the third in Karachi from December 17-21, respectively.

The Test series comes months after Pakistan was hit by floods which affected 33 million people.  The deluge killed more than 1,700 people and inflicted billions of dollars of damage. Pakistani authorities' estimates of the damage have varied from $10 billion to $40 billion.

“This is great to be in Pakistan for the first time for this historic series. To be back here after 17 years as a Test side is very exciting. There is a sense of responsibility amongst the playing and support group and to be here is special,” Stokes wrote on Twitter.

“The floods that devastated Pakistan earlier this year was very sad to see and has had a significant impact on the country and the people. The game has given me a lot in my life and I feel it’s only right to give something back that goes far beyond cricket.”

Appreciating the gesture, Prime Minister Shehbaz Sharif thanked the English team captain.

“Empathy for suffering humanity is the greatest of all virtues. His gesture epitomises the great British tradition of philanthropy.”

Interior Minister Rana Sanaullah also welcomed the English team to Pakistan after 17 years and thanked British High Commissioner to Pakistan Christian Turner for making the tour possible

“We welcome England team, who will be playing test matches on soil after such a long hiatus. It’s a result of the relentless efforts of all the ppl involved to make this happen, especially Chargé d'affaires Christian Turner. Hoping for a great contest btw the two quality sides,” Sanaullah wrote on Twitter.

Last year, England were due to visit Pakistan but pulled out after New Zealand abandoned their tour minutes before the first one-day international, citing security alerts.

There were fears of a similar pullout earlier this month following an attack on former prime minister Imran Khan during a protest march in Wazirabad, a city in Punjab province.

But England’s Test skipper Ben Stokes quashed all fears following positive security advice.

“It’s been a long time since England have played Test cricket in Pakistan,” Stokes said in Abu Dhabi on Friday.