The International Monetary Fund (IMF) had told the US Ambassador Anne W. Patterson that it was essential for the Fund, that the Ministry of Finance was led by an accountable minister to sign off on Pakistan’s submissions to the Fund. This was disclosed in US embassy’s confidential cable titled “Tarin Out, Shahabuddin and Nasim Beg”, posted on the WikiLeaks website. The cable was sent after the resignation of the Finance Minister Shaukat Tarin in February 2010.
Government indecision on Tarin’s successor
It quotes IMF Resident Representative Paul Ross, and IMF Director Middle East and Central Asia Department Masood Ahmed, telling the US Ambassador that for the Fund to complete the fourth review and approve the fifth tranche of IMF funding, it was imperative for the Ministry to be led by an accountable minister to sign off on Pakistan’s submissions to the Fund. Clearly concerned about a scenario whereby a Federal Minister of Finance would be augmented by an Advisor to the Prime Minister for Finance simultaneously, Ahmed reportedly said that the Fund would also require a clear chain of command at Finance, so that it could confidently hold the Government of Pakistan accountable to implement programme reforms. The cable further read that the US Ambassador stated that Tarin’s sooner-than-expected departure exposed the fact that the GoP were still un-decided on a successor, despite its certain knowledge that Tarin was planning to depart. According to the cable, Masood Ahmad freely admitted to the Ambassador that the Fund was not alone in allowing Pakistan an extra measure of grace in meeting the terms of Pakistan’s structural adjustment programme, largely because of the credibility the Fund attached personally to Shaukat Tarin. In the cable, Ahmad confided that the Fund was concerned that Pakistan’s enthusiasm for completing its programme was waning. He predicted that, without a driving force willing and able to stand up to the political leadership on tough issues such as tax reform, where Ahmed said the politicians were in perfect accord – to evade taxes, the number of missed targets and implementation delays would grow, leaving the programme to “fizzle out”.
Foreign support of Tarin’s successor
It said that the Ambassador had been weighing in with President Zardari, to stress their hope that his government’s appointment to fill Tarin’s shoes would inspire confidence among the business community donors and the IMF. The cable revealed that there was unease among many, foreign and Pakistanis alike that neither candidate was the best among Shahab-ud-Din and Nasim. Hafeez Pasha appeared to be the candidate mentioned as inspiring the most confidence. The cable said that Deputy Governor of the State Bank of Pakistan (SBP), Yaseen Anwar, opined that the IMF programme provided the necessary roadmap for reforms for whoever came in as minister – it was not necessary to have an economic genius at the helm provided he strictly followed the agreed plan. Absent a horrible policy mis-step, Yaseen did not feel that either Nasim or Shahab-ud-Din would have a negative affect on operations at the SBP.The report cited Muneer Kamal, CEO of KASB Bank, mentioning that it was important for the incumbent to be a Federal Minister, and thus an elected official. Kamal said that, until Tarin became a Senator, the Prime Minister had chaired the Economic Coordination Committee (ECC). As Advisor, Tarin also did not have full authority over the Federal Board of Revenue (FBR), resulting in frequent problems reforming the FBR, particularly merging the various collection departments.
Rift between Gilani and Zardari
According to conversations on February 24 with Treasury Attache and Embassy, it does not appear to be certain which of the two leading candidates, current Minister of Health, Shahab-ud-Din, or CEO of Arif Habib Group, Nasim Beg, would eventually assume control of the Ministry of Finance. According to the cable, there was reportedly a dispute between Zardari, who preferred Beg, and Gilani, who preferred Shahab-ud-Din. Between the two, Shahab-ud-Din was considered to be politically stronger, but weaker in his knowledge of finance and economics. However, Dr. Hafeez Pasha, Chairman of the Tax Advisory Council and a member of the Prime Minister’s Panel of Economists, was the preferred candidate of those outside the government, including the international community. Shaukat Tarin resigned on February 23. Tarin first signaled his intention, privately, to resign a few months before his resignation since Silkbank was nearly bankrupt. Although not mentioned as frequently as Nasim Beg or Shahab-ud-Din, Dr. Hafeez Pasha – who was the preferred candidate of Shaukat Tarin and Chief of the Army Staff Ashfaq Kayani – the cable mentioned was still a potential candidate. The cable said that several senior officials in the FBR also confided privately that Pasha was a known quantity, and someone they felt would be strong on continuing tax reforms. Zakir Mahmood, Chairman of Habib Bank Limited, said that Pasha was also his preferred candidate since he had both technical competence and a degree of political heft. In the cable, Mahmood admitted that Pasha does not carry the weight of a sitting politician, but his name was well known and would inspire confidence in the market.
