The hot seat at Finance Ministry

If you think PML-N party workers are ecstatic over their partys stellar performance at the polls, take a look at investors in the country.
The stock market welcomed the PML-N to government with its benchmark index surging over 20,000 points-level. The debt market participants embraced the latest T-Bill auction with heavy participation skewed towards 12-month paper. Smart money is finding its way in anticipation of pro-business and pro-investment policies.
The first piece of good news expected on the economic front will be revealed in the upcoming monetary policy through which the central bank is expected to keep the discount rate low. Inflation is likely to remain well within the yearly target of 8-9 percent and the current account deficit will likely be restricted within one percent of GDP.
But the elephant in the room is the fiscal deficit and putting reins on it will be a gargantuan task for the incoming Finance Minister. The last time Ishaq Dar had such a responsibility, his public comments caused more harm than good. But hopefully, this time around his preoccupation with bashing the previous regime will not tower over prudence.
The balance of payment crisis that is looming can only be alleviated by attracting foreign investment flows to the country. FDI that was over seven billion dollars per year five years back is now limited to a few hundred million dollars.
However, foreign investment will not start pouring in right away in contrast to hot money that is pumping hard into the stock market. It would be interesting to see how Dar is going to tackle the issue as in past he was very much against knocking the doors of Fund.
Preparing the new budget is another unenviable task that will be staring the incoming Finance Minister in the face, as soon as he sits on the hot seat. Despite the celebrations among businessmen and investors, the incoming government would be well advised to implement some unpopular, but needed reforms aimed at enhancing the tax base.
Simply put, between presenting a balanced budget, taming inflation, reviving investment and addressing the circular debt that is strangling industry in the country; the incoming Finance Minister already has his work cut out.