Let us be clear. Whatever his promises on ‘naya Pakistan’ Khan still has to answer questions at the Election Commission of Pakistan on a petition last year by Akbar S Babar, a former party colleague who fell out with him. Babar alleged that nearly $3 million in illegal foreign funds were collected through two offshore companies, registered with Imran Khan’s signature, and that money was sent through illegal ‘hundi’ channels from West Asia to accounts of party functionaries. On the face of it, it sounds like a hawala operation.
While the Pakistan establishment has primed the judiciary to proceed vigorously against Nawaz Sharif, the same vigour has been lacking in the pursuit of cases against Khan.
But that is now yesterday’s news. Today, the biggest challenge before Khan is the management of the economy and how he will bring it back on the rails.
That Pakistan’s economy is a mess is the world’s worst kept secret. The steady devaluation of the Pakistani rupee and erosion of foreign exchange reserves, combined with a runaway current account deficit (nearly $12.5 billion) is a cause for anxiety and loss of self-esteem as a nation. Recent reports that contractors who were seeking payment for work done on the construction of the China-Pakistan Economic Corridor were issued cheques that were not honored illustrates the depths of the crisis. Even assuming that additional multilateral and bilateral financing (the majority of which will likely come from China) plugs the financial hole, Pakistan will still need nearly $10 billion – for that, it will have no option but to approach the International
Monetary Fund (IMF) once an elected government is in place.
Obviously, this will come with conditions: Pakistan’s tax revenue-to-GDP ratio currently stands at 14 per cent, made up of a tax base that is roughly one quarter of the population (56 million eligible tax payers in a population of 207 million). Tax reforms will likely follow. To avoid compliance, an instant flight of capital – undocumented funds finding their way out of the country – is likely, leading to a deepening of the crisis in the short run. The IMF is also expected to ask Pakistan to restructure and possibly privatise state-owned enterprises like Pakistan International
Airlines, Pakistan Steel Mills, Pakistan Railways and the local electricity distribution companies.
The finance minister in Imran Khan’s government will probably be Asad Umar, described by the local media as one of the most celebrated CEOs in the corporate history of Pakistan. Umar, in his late 50s, took early retirement from the largest local conglomerate, Engro Corporation. He also worked at Exxon (North America) in Canada. He threw all that up to return to Pakistan and seek a political future. He was Imran Khan’s go-to guy to formulate the party’s energy policy, industrial policy and skill development policy. In addition, he jointly led the party’s macroeconomic and poverty alleviation teams with businessman and two-term MP Jahangir Khan Tareen. Tareen would have been the top contender for finance ministership but he has been disqualified from contesting the elections (like Nawaz Sharif) after being found to have concealed his 12-acre Hyde House property in London.
Umar has been forthcoming about the need for Pakistan to level with the world on the extent of its economic crisis. So, he advocates a Chapter IV engagement with the IMF that will lay bare to the world the exact details of Pakistan’s economy, and then seek help from multilateral agencies about how to set it back on track.
With the long shadow of Inter Services Intelligence (ISI) and under the benevolent eye of steel brother China, Pakistan can’t really go wrong: and who says it is not a democracy?