Ex-JPMorgan banker set to steer cash-strapped economy: Bloomberg

KARACHI: Prime Minister Shehbaz Sharif picked a former banker from JPMorgan Chase & Co. as finance minister, marking a shift to using technocrats to steer the cash-strapped economy and negotiate for new loans from the International Monetary Fund.

Muhammad Aurangzeb, 59, was appointed to the position, the Finance Ministry confirmed in a post on X. His appointment suggests a shift in strategy for Sharif and his party who have relied on four-time finance minister and close ally Ishaq Dar in the past.

The new finance minister’s most pressing challenge would be to secure at least $6 billion in loans from the IMF to tide over the economy, which has been battered by surging inflation and slowing growth. The nation also needs to unlock the final $1.1 billion tranche from an IMF program that ends next month. Some $1 billion of Pakistan’s dollar-denominated bonds mature in April as well.

“We are in that state that we need to stay on course, not mess around with the exchange rate, not provide subsidies, pass on administered prices on the energy sector and take it from there,” said Asad Sayeed, an economist at the Collective for Social Science Research in Karachi. “It’s not an imaginative task but more a management one.”

Aurangzeb expects the currency to continue its stabilisation and wants to start talks with the IMF this week, he told local media after he was sworn in. Sharif said the economy needs to be jumpstarted. “We have to carry out a surgical operation as antibiotics will not work at all,” Sharif said after the cabinet appointments. “Whenever there is a will, there is a way and it is never too late.”

A former CEO with JPMorgan’s Global Corporate Bank in Singapore, Aurangzeb is a seasoned banker who headed Pakistan’s biggest bank by deposits Habib Bank Ltd. for the past six years. He said last year any new government would have to address structural benchmarks set by the IMF to move the economy to growth mode. Still, Sharif has the experience of closing a deal with the multilateral lender as prime minister. He negotiated with IMF Managing Director Kristalina Georgieva, sidelining the former finance minister Ishaq Dar who stalled on some reforms, according to a report from the United States Institute of Peace published after the elections.

Bloomberg Economics analyst Ankur Shukla said Sharif has a track record of carrying out reforms and his return as prime minister for a second term increases the chances of securing a new IMF package. His party’s election manifesto — which includes cutting the fiscal deficit and fixing the current account balance — is aligned with the IMF targets or, in some cases, even more ambitious, Shukla wrote in a report.

IMF aid will help in retaining support from creditor nations such as Saudi Arabia and the United Arab Emirates, which poured billions of dollars into financing. Pakistan has rewarded investors who still ploughed in funds. The nation’s dollar bonds handed them a gain of almost 25% this year, the biggest in Asia. The currency is up about 1%.

Despite the new appointment, some observers remain pessimistic. “Even if you bring legendary people like Larry Summers or Rubin, they can’t do anything,” said Nadeem Ul Haque, a former economist with the IMF. “We have deep, deep problems in the economy and society that need to be fixed. Changing people or the IMF program is just window dressing.”