Pakistan’s finmin curse

Asad Umar’s removal from the Q-Block is a story bigger than Asad himself; it is also bigger than the PTI and its real or perceived incompetence. It is an unfortunate tale of Pakistan’s systemic economic crises and weak political development that has marked the country’s chequered history.

Two obvious facts emerge from the history of finance ministers in Pakistan. First, for one reason or another, the country’s second most important slot (often termed deputy PM) has changed hands more than perhaps the PM slot itself. Between 2013-2018, there were two finance ministers; before that there were five, whereas the second terms of both Nawaz Shariff and Benazir Bhutto also had two finance ministers each.

Second, Asad Umar was the country’s only elected finance minister who was positioned for that slot throughout the election campaign of any political party. Sans Benazir Bhutto, who held the portfolio of finance twice for want of options, and Naveed Qamar who held the portfolio reluctantly for very brief periods as stop gap measure, Pakistan has not had an elected (party-based) politician managing its finances in nearly 40 years. Prior to the 70s, the finance minister slot was mostly held by bureaucrats; after 70s it has mostly been held by some kind of technocrat. (Note: the illustration does not include ministers of state; nor does it include advisors who were given a status of federal ministers)

Pakistan is not unique to technocracy; the concept has existed since 1930s across developed and developing countries, though mostly prominent in times of trouble. The Great Depression, or Greece and Italy post-Great Recession, for example.

Academic literature suggests a host of reasons why technocrats are preferred over politicians who may have no or little background in economic or public finance. It is rooted in the idea that a technocrat who possesses the right skills and is free from political compulsions is the best way to bring about reforms.

When a country transitions to democracy; when it faces an economic crises without or without the need to go to the IMF; or any other situation where a government wants to give confidence to foreign investors, markets, multilaterals and other donors that the person in charge knows their language and will do as they please, then governments tend to appoint technocrats. Another reason why governments appoint technocrats is when political parties have an embarrassingly poor pool of talented and hardworking politicians. In Pakistan’s case, all of the above reasons apply. Yet, the technocratic model hasn’t really worked out for the country.

Since technocrats eventually report to the chief executives who hired them, they are not entirely free from political compulsions. If successive Pakistani military and civilian governments are to be blamed for the country’s boom-bust cycles and structural imbalances over the last few decades, then their technocratic finance ministers also ought to share the blame. If these technocrats could not implement their plans due to corruption and political compulsions of their bosses, then they could have resigned from their positions, being ‘honest, intelligent and hardworking’ professionals.

Politics aside, it should not be a forgone conclusion that a technocrat will always do better. A professor of economics may have won a Nobel, but he will not necessarily know politics, which is both the end and the means in the running of the affairs of any state.

These ‘skilled’ people appointed in Pakistan are outsiders; they don’t personally have to go back to their constituencies. They learn on the job while their secretaries run the show from behind the scenes. Speaking of which, the importance of having a strong secretariat was something which Asad possibly didn’t realise, which is perhaps why he didn’t change the secretary for such a long time.

A politically inclined leader on other hand is more likely to be able to sell a policy to her cabinet colleagues and public, than a professor, though on the face of it, Asad was unable to achieve that, despite being an elected finance minister.

Granted that without the banner of Imran Khan, PTI’s future and Asad’s status as a politician may stand nowhere. But as the fact stands, he was the only politician who came to Q-block after successfully campaigning on the streets of his constituency. He was not an economist, but so haven’t been UK’s Chancellors, Germany’s treasury officials, and many others successful examples elsewhere in the world who were historians, lawyers, businessmen and engineers.

The argument that an economist must head finance ministry is also overrated because it discounts the role of a politician. A politician’s job is to broker between the state and the people, and thereafter be accountable to the latter. The technocrats on the other hand do not have, what Naseem Talib, calls a ‘skin in the game’. The resume cannot be discounted but having a skin in the game is more important than a fancy resume.

Is it therefore not a mockery of democracy in Pakistan where political parties claiming to be champions of democracy give the very cockpit of the country’s economy to unelected officials? The PPP, the PML-N, and now the PTI – all are equally guilty on this account.