8 - 14, 2010

Joseph Stiglitz, the noble prize laureate wrote many years back: "Developing countries are often advised (or instructed) to undertake reforms recommended by "experts" who are called "technocrats" and are often backed by the IMF. Opposition to the reforms is dismissed as "populist". Countries that fail to undertake these reforms are dismissed as lacking political will, and soon suffer the consequences: higher interest rates when borrowing abroad... So the next time you hear rumblings in the legislature of an emerging democratic country against this or that "technocratic" proposal, think twice before dismissing the deputies' doubts as populist rants. Perhaps the populists are popular because they know something that the technocrats don't."

Immediate after his induction as an advisor, the outgoing finance minister Shaukat Tarin had to undergo grilling by the legislators who made no bones about their dislike for the unelected advisors who, they thought, hailed from abroad with little knowledge of politics. One of them went to the extent of challenging Tarin to an election duel which was unfair on his part like if Tarin could have responded by challenging him to secure an IMF bailout package.

The Stiglitz assertion seems to be well founded, but the problem is that Pakistan can not be simply categorized as an emerging democratic country. We have been struggling for the last 62 years to take a sort of a democratic shape but the political leadership that we are made to put reliance on lacks the quality to vie for a true democratic configuration. Our decades-old political system has failed to digest the simple basic condition of graduation for the legislators. Those who are elected are hardly able to understand the complexities of economic and financial systems, the exceptions notwithstanding. In this scenario, the appointment of unelected technocrats to look after the country's economic affairs becomes imperative. The fickleness and fragility of democratic structure invites frequent military interventions, with the entire blame leveled against the army and the inapt democratic leadership scot-free.

Since inception, we have had as many as 29 finance ministers both full time and caretakers. The list highlights three prominent technocrats from the financial sector who served an almost identical individual term of 8 years- Muhammad Shoaib, Ghulam Ishaq Khan, and Shaukat Aziz.

Interestingly enough, the three technocrats-driven regimes under the dictatorship of Ayub Khan, Ziaul Haq, and Pervez Musharraf proved that economic policies during an autocratic rule are at least consistent.

Ghulam Muhammad 4 yeas Rana M. Hanif Khan 2.5 years Naveed Qamar 1 month
Ch. Muhammad Ali 4 years A. Hafiz Pirzada 3 months S. Javed Burki CT* 15 months
S. Amjad Ali 3 years Ghulam Ishaq Khan 8 years Sartaj Aziz 1.5 years
Muhammad Shoaib 3.5 years Mahbubul Haq 10 months Ishaq Dar 1 year
Abdul Qadir 0.5 years Mian Yasin Wattoo 2.5 years Shaukat Aziz 8 years
Muhammad Shoaib 4 years Mahbubul Haq CT* 6 months Salman Shah CT* 5 months
N.M Uqaili 2.5 years Benazir Bhutto 2 years Ishaq Dar 1 month
V.Admiral Ahsan 0.5 years Sartaj Aziz 3 years Naveed Qamar 5 months
Nawab M. Qazlbash 1.5 years S. Babar Ali CT* 3 months Shaukat Tarin 1.5 years
Mubashar Hassan 3 years Benazir Bhutto 3 years . .
CT* caretaker

The economic progress during these much-criticized rules too outweighs the economic performance of frequently-changing democratic eras. This might appear a paradox or a freak anomaly but the fact remains that technocrats from the financial and banking sectors have done lot of good for this country and its economy.

Muhammad Shoaib served two terms of 7.5 years, under Ayub Khan when the economy recorded an average growth of 5.8 percent. Ghulam Ishaq Khan, besides being a shrewd technocrat, was the staunch supporter of country's nuclear program. He served 8 years under Ziaul Haq when the economy recorded an average growth of 6.6 percent. Country's overall economic performance under Shaukat Aziz was par excellence, some technical flaws creating certain imbalances notwithstanding. Economy during Musharraf rule recorded an average growth of 5.4 percent.


1951-58 Democratic era 3.03 NA
1958-69 Gen. Ayub Khan (dictatorship) 5.84 118
1969-71 Gen. Yayha Khan
5.51 173
1972-77 Z.A Bhutto (democracy) 4.42 170
1977-87 Gen. Ziaul Haq (dictatorship) 6.60 346
1988-99 Benazir & Nawaz
4.13 412
1999-08 Gen. Pervez Musharraf
5.40 709 ($1080 in 2008)
2009 Gilani/Zardi (democracy) 2.00 NA

The reason why economic progress during democratic eras remained rather subdued is not so easy to pinpoint as it involved a number of imponderables, yet the policy consistency factor could be easily identified as the most important one. The dearth of professional brains in the political parties is yet another factor. Pakistan Peoples Party, arguably the most popular pro-federation party, obviously suffers from this syndrome, as Benazir herself had to hold the finance minister portfolio for 5 years during her two intermittent rules. It was, perhaps for the first time that PPP hired a financial technocrat from outside the party. With Shaukat Tarin having recently resigned, the ruling party faces a real task to dig out someone else to steer the economy through difficult times.

Shaukat Tarin being a true professional did his job wonderfully by timely striking a deal with the IMF to sustain the economy that was really on the brink of collapse. It is unfortunate that his performance is subject to harsh and misleading criticism, especially by certain sections of the Urdu press. Recently an economist-cum-writer has alleged that Tarin has drawn the country to the brink of disaster by signing SBA with the IMF just for unproductive spending. This is highly misleading as IMF assistance was the only way out in the face of a very precarious balance of payment position. An economy under stress has to be resuscitated first. He has also been criticized for making incorrect estimates of Pakistan's expenditures on war on terrorism. Such estimates are not easy to extrapolate as there are no economic or mathematical formulae for the purpose. Joseph Stiglitz who expanded US government estimates of $650 billion to $3 trillion in his book "Three Trillion Dollar War" must now be rethinking to drastically revise his estimates. Moreover, it was not the job of Tarin alone to make such estimates. He also blames the "mysterious" rupee devaluation on Tarin. There is nothing mysterious about the devaluation. It is a clear cut case of cause and effect. The devaluation took place because of dollar flight triggered by the untimely and totally uncalled for government change engineered by the elite and feudal forces of the country the said writer himself being on their side.

Financial sector has done immense service to the country by producing such stalwart technocrats as Muhammad Shoaib, Ghulam Ishaque Khan, Dr. Mahbubul Haq, Shaukat Aziz and Shaukat Tarin. They all had been in the thick of the things and in the center of the live wire financial markets. They were and are far better than the theorists who have buried themselves under the junk of dull and drab economic theories. They are well advised to come out of the worm-eaten books and do something practical for the country. Dr. Younus of Bangladesh became immortal when he came out of the economics class room and got to the villages and fields of poor farmers.