There would be legions of ministers who have served succeeding governments in Pakistan over the past six decades but there would be very few who would have resigned their positions as ministers in the federal government, and more so from such a key post as Finance Minister. Shaukat Tarin did just that back in 2010 after a rocky stint in the federal cabinet – and hasn’t looked back. The steely stuff he is made of, he moved forward to take on new challenges and conquer fresh turfs, exploring exciting new horizons because the mantra that makes him click is “Let’s do it!”
THE BEGINNING OF HIS TALE
Tarin’s story begins in the world of finance as a prominent banker who worked as the country manager of Citibank in Pakistan and later served as head of Habib Bank and Union Bank and twice as chairman of Karachi Stock Exchange. During his 22-year association with top financial institutions, Shaukat Tarin has built a name that is synonymous with success in the world of banking and finance. He is the one who introduced consumer banking in Pakistan while heading Citibank. In 1997, Prime Minister Nawaz Sharif asked him to turn around Habib Bank. It was said that in order to carry out the PM’s bidding, Tarin said goodbye to a $1 million-plus banking job in the United States and got down to the task. Along with Zubyr Soomro at the United Bank and Muhammad Mian Soomro at the National Bank of Pakistan, he was a part of a highly capable trio that successfully pulled these key commercial banks out from the dumps. Tarin left Habib Bank in 2000 to buy and revamp Union Bank. In this position, he was associated with the acquisition by Standard Chartered Bank of a 95.37 per cent interest in Union Bank in September 2006 for $486 million. Later, in 2008, with the help of some investors, he took over Saudi Pak Commercial Bank which later became Silkbank. In fact, it was Shaukat Tarin who had led the consortium of investors which had acquired Silkbank in March 2008.
INVITED TO JOIN GILANI’S GOVT
Soon after in October 2008, Shaukat Tarin was invited by Prime Minister Yusuf Raza Gilani to join his government, Pakistan was in a deep economic crisis and the government was looking for a competent financial professional to come and pick up the pieces. Shaukat Tarin perfectly fit the bill as he had proven his capabilities as a successful banker in Pakistan and abroad and was also recognized and respected in top internal financial circles.
Shaukat Tarin joined the government as the advisor and was subsequently elected as the senator from Sindh on the technocrat quota in 2009 after which he assumed the position of Finance Minister. In this key position, he also headed the Executive Committee of the National Economic Council (NEC) and the Economic Coordination Committee (ECC) and was behind a number of key economic decisions and achievements.
BECOMING THE FINANCE MINISTER
As soon as he took over as the finance minister, Shaukat Tarin set about taking measures to stabilise the economy which was down in the pits after having galloped forward at 7 to 8 per cent growth rate in the preceding years. The improvements that began to appear in the economy then were described by Tarin himself as ‘early green-shoots of growth’. As a result of Tarin’s economic stewardship, the country’s large scale manufacturing sector started showing signs of a turnaround. At that point, agriculture was already showing positive signs but the services sector required to perform better. From his vantage point as the finance minister, Tarin had a better view of things and was quite optimistic about the future in the near term. It was on this basis that he had pegged the economic growth rate at 3.5 per cent in 2009-10, compared to the appalling 2 per cent growth rate that the country had experienced in the previous year. Once Tarin had done the initial firefighting to arrest the economic free fall, he went about setting targets for Pakistan’s future economic growth on sound lines. His vision was to set benchmarks for sustainable growth over longer periods rather than to fight on a day to day basis. The main planks of the measures that he wanted to implement were good governance, austerity on part of the government and a thorough restructuring of public sector entities. He also had plans to revamp the entire tax structure.
ADDRESSING CHALLENGES
While Shaukat Tarin’s vision and mission was sound and pragmatic, as could be expected, he did run into obstacles on part of the bureaucracy that was well set in its old ways and, as is typical of any establishment, was not willing to change its modus operandi. The political players threw in their lot for good measure in applying brakes to the acceleration process that Tarin had kick-started since the status quo served their own narrow interests. However, the high flier that he is by nature, Tarin kept driving the thrust forward and crossed many noteworthy milestones on the way forward. The single major task that he accomplished during his tenure was getting all the provinces to arrive at a consensus and sign the National Finance Commission (NFC) Award. This served to dispel the atmosphere of mistrust that had existed between the provinces and the federation for 19 years regarding annual distribution of financial resources by the federal government. In retrospect, he likes to think that his steering a consensus on the agreement for equitable distribution of resources between the provinces and the federal government was a major achievement, especially since its resolution had eluded past governments for two decades.
CONTRIBUTIONS TO THE PAKISTANI CAUSE
Tarin’s measures as the finance minister greatly served to raise the international perception of Pakistan which was evident from its improving international ratings and also the fact that there were reverse flows of investment in the country’s stock exchanges. However, when Tarin left, the dynamism and vitality he had injected into the economic environment, simply fizzled out and his agenda for growth and stabilization was left unfinished. Tarin later lamented that he wished he had completed all the initiatives he had launched. To him, tax reform was one area where the government needed to have kept working to achieve a target of 15 to 20 per cent tax-to-GDP ratio. In his time, in one year, the ratio had gone up by more than 1.8 per cent. While in the eight years of Pervez Musharraf’s rule, the tax collection ceiling had moved up from Rs300 billion to Rs1,000 billion, which was an increase by Rs700 billion. In the two years of Shaukat Tarin’s tenure, it increased by Rs500 billion though he said later that he was still not satisfied with the performance as it could have been much better. Shaukat Tarin believes that all the nice stories of rapid economic growth in Musharraf’s time actually had holes in the armour. He is of the view that the previous government had no strategic thought process in its later years. In his opinion, since the economy was growing under Musharraf, the government became complacent and lost its way somewhere on the way as it did not take due measures to sustain the growth. They just forgot to pay attention to the key sectors of the economy; agriculture and manufacturing. The agriculture sector never grew by more than 1 or 1.5 per cent during the entire decade, while manufacturing started slipping down after growing rapidly in the early part of the decade as the cost of doing business had gone up.
UPBEAT ABOUT OUR ECONOMIC FUTURE
In Tarin’s view the exchange rate maintained then was also unrealistic as the overvalued rupee had made the country’s own goods more expensive than imported ones. In those days, the tax to GDP ratio never went up by more than 9 to 9.5 per cent which meant that the moment foreign aid and grants stopped, the dream was over.
Shaukat Tarin still has a lot of faith in Pakistan’s economic future provided the government takes a deeper look at the prevailing problems and spends more on alleviating poverty, inducts austerity measures, improves the education, healthcare and agriculture sectors and takes steps to revitalise the manufacturing, infrastructure and power sectors.
He still believes that a concerted strategy would also address the problems of those 50 million who are below the poverty line. In his view, there is just not much being spent on education and health which prevents the country from achieving its economic and social goals.