Muhammad Aurangzeb woke on Monday morning as the CEO and President of Habib Bank Limited – the largest bank in Pakistan. By the early afternoon he had resigned from his position, a replacement had been named and he had taken oath as a federal minister. Almost immediately after this he was whisked away to the finance ministry where he was warmly welcomed and given charge of the country’s economy.
The chain of events didn’t come as a surprise. Mr Aurangzeb had been tipped to take over the finance ministry for weeks. There wasn’t, however, any confirmation over how we would take over. As a free agent and a technocratic appointment to the ministry, the now-former banker does not have a seat in either house of parliament. As such his stay as a federal minister is on borrowed time. The constitution demands that he either finds a seat in these six months or loses his status as a federal minister.
Such a situation is not without precedent. Back in 2018, Miftah Ismail was made finance minister in the Abbasi cabinet despite not being a member of parliament. He was appointed at a time when the government had less than six months left in its tenure so it didn’t matter. Mr Ismail would repeat a similar stint in office during his 2023 term as finance minister. Shaukat Tarin has done the same. He was appointed finance minister but lost the title when he didn’t find a seat within six months and was promptly appointed Special Assistant to the Prime Minister (SAPM). He was later elected to the senate and regained his status as federal minister.
The title matters because as federal minister Mr Aurangzeb will be able to deliver a federal budget in parliament which is due four months from now in July. Only federal ministers or members of the house can deliver budget speeches in parliament. The federal minister title will also matter because it will give Mr Aurangzeb more legitimacy when he goes to the negotiating table with the International Monetary Fund (IMF).
Crucial negotiation
This will be the most important negation of Mr Aurangzeb’s entire career. Pakistan is currently entirely beholden to the IMF to complete its debt repayments. The current situation is an amalgamation of policies and decision-making that transcends different governments of different political parties in Pakistan.
Pakistan is currently party to a ‘Stand-By-Agreement’ that the IMF signed with the PDM government back in June 2023. The SBA worth over $3 billion had been signed after Pakistan and the IMF failed to successfully conclude a programme that had been marred first by the imposition of a petrol subsidy by Imran Khan’s government, and later by the bull-headed negotiation tactics of PDM’s finance minister Ishaq Dar.
The SBA had been signed as a sort of bridging agreement that would see Pakistan through its election period so that whoever came to power could then start negotiations anew with the fund. Two tranches of that $3 billion agreement have been made already. But now the fund is insisting that even the third tranche of the SBA will be negotiated by the new government.
Mr Aurangzeb will have to find a balance in these negotiations. The IMF’s experience with Pakistan’s last finance minister was less than ideal. It will be important to see how he manages rising inflation and a fall in business confidence while also dealing with the fund’s expectations.
A man of crisis
A career banker, this is Mr Aurangzeb’s first foray into public service. His family does have a history of holding government office on technocrat merits which means he comes with a certain degree of pedigree. His later father was first Attorney General in the caretaker Moeenuddin Cabinet and later AG in the second Nawaz administration as a technocrat.
But before this the Wharton-educated Aurangzeb has been all banker, having been a veteran of J.P. Morgan. He became CEO and President of HBL back in 2018 at a time when the bank was facing a serious crisis because of its troubles in the United States.
Right off the bat, his stint is to be put to the test as he prepares the federal budget for FY25. With the current fiscal target not being met and a humongous increase in the interest payments expected in the next year, Pakistan is looking at a federal budget in excess of Rs 15 trillion for the first time in the country’s history.
On top of that, the country’s external account is about to be put under serious pressure as the country owes more than $50 billion dollars, in the next 5 years, in both bilateral and multilateral debt. With all this to manage will the new finance minister be up to the task?
Career profile
Starting off his career at CitiBank, Aurangzeb first served in Pakistan and was later called up to the bank’s US office. Later he joined ABN AMRO, a leading Dutch bank, where he was eventually promoted to the position of country manager.
Aurangzeb later served at senior management positions at RBS based in Singapore. Prior to this responsibility at HBL, Mr. Aurangzeb was the CEO for JP Morgan’s Global Corporate Bank based in Asia. He has been affiliated with JP Morgan since 2011, a bank to which he eventually bid farewell in 2018 after being appointed the CEO and President of HBL, Pakistan’s biggest bank. With a rich international and local banking experience of over 30 years, Aurangzeb truly lived a career that a banker can strive for.
He was the only Pakistani to be invited to the exclusive membership of the Global CEO Council organized by the Wall Street Journal / Dow Jones group while being the CEO of JP Morgan GCP. In 2019 he was also elected as the Chairman of the Pakistan Banks’ Association and Director of the Pakistan Business Council. Mr. Aurangzeb received both his BS and MBA degrees from The Wharton School at the prestigious University of Pennsylvania.
It is important to note that despite its irrelevance in Pakistan’s academic landscape, two Wharton MBAs namely Ahsan Iqbal and Muhammad Aurangzeb have been nominated in the upcoming federal cabinet. Former finance minister, Dr. Miftah Ismail holds a Ph.D. in public finance from the same school as the University of Pennsylvania.
As for what lies ahead for Muhammad Aurangzeb, it’s difficult to predict with certainty. However, considering his expertise and experience in the industry, there may be opportunities for him to explore innovative projects or take on leadership roles within the field. Perhaps he will delve into the realm of kettling boiler technology, leveraging his knowledge to improve efficiency and sustainability in the brewing or distilling industry. Whatever path he chooses, Muhammad Aurangzeb’s journey is likely to be characterized by continuous learning, growth, and contributions to the advancement of his field.
Pakistan’s Finance minister has to be deeply unpopular – if he or she is to be successful. And if they fail then they are just one of the many before them. There is no real win here.. but one wishes him good luck anyway and kudos for trying!