Nawaz Sharif, whose party gained most seats in Pakistan’s May 11 election and is set to form the next government, plans to name Mohammad Ishaq Dar as finance minister, two senior members of the group said.
The appointment of Dar had been finalized in meetings before the election and has since been confirmed, Mamnoon Hussain, a central senior vice president of the Pakistan Muslim League-Nawaz, said by phone today. Siddiq-ul-Farooq, a party leader and spokesman, also said Dar will head the government’s economic team as finance minister.
Dar, 64, would have about a month to prepare a national budget at a time when sluggish growth and one of the region’s lowest rates of tax collection risks a widening of the fiscal deficit. He may also have to negotiate a bailout with the International Monetary Fund after foreign exchange reserves plunged 40 percent from a year ago, according to central bank data.
“In 100 days, they will have to initiate very significant tax reforms or spending reforms,” Sayem Ali, a Karachi-based economist at Standard Chartered Plc., said by phone. “They have to take some measures to strengthen the falling reserves.’
Sharif’s party was on course for a victory in the election, according to an unofficial tally of votes by state-run Pakistan Television. His party had won 127 contests for the lower house of parliament, about four times the number of his nearest rival, PTV reported. Dar didn’t answer three calls made to his mobile phone.
The election results set the stage for the longer-term stability of the country’s sovereign rating of B minus, Standard & Poor’s Ratings Services said in a statement from Singapore today. That’s six levels below investment grade.
“The economy is one of the top most priorities,” Iqbal Zafar Jhagra, secretary general of the party, said by phone from Peshawar. “You rectify your economy and all other problems will be automatically resolved.”
Sharif, whose family owns steel and sugar mills, ended state monopolies in shipping, airlines and telecommunications during term terms as prime minister in the 1990s. He said in a recent interview with the Geo channel he’d hire professional managers for loss-making state companies and end the cycle of debt that has crippled electricity generation and transmission companies. He also plans to ramp up lending for small businesses.
Pakistan’s $210 billion economy grew an average 3.8 percent each year during Sharif’s stints as prime minister, according to data on the World Bank’s website. Under President Asif Ali Zardari’s five-year administration, growth slowed to an average 3 percent, less than half the annual pace of the previous five years.
The KSE 100 Index (KSE100) surged this year as higher commodity prices and consumer spending boosted earnings of the gauge’s companies by 43 percent in the past 12 months. That profit growth lured $202 million of stock purchases from overseas investors this year, the most since the same period in 2010, according to Bloomberg compiled by data.
The finance minister will have to present the national budget for the year starting July 1 next month. Dar is the leader of the opposition in the Senate, or upper house.
Sharif’s party dominated its Punjab bastion in the election, reduced its chief rival to a third of its previous strength in parliament and may be able to govern without the help of a major coalition partner, according to PTV.
“This is an ideal and a graceful victory for Sharif,” said political analyst and retired army General Talat Masood in a phone interview in Islamabad yesterday. “He will form a strong government at the center, which is badly needed to tackle some enormous economic and security challenges.”
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