A farewell to Shaukat Tarin

The Pakistani media has been almost unanimous in singing a dirge after the decision of Finance Minister Shaukat Tarin to resign was rather clumsily made public by the Prime Minister of this country - in an aside seconds prior to the commencement of the post-breakfast press briefing with the PML (N) leadership as a mike, unbeknown to him, was turned on.
The reason is the general perception that Tarin alone amongst the entire 60 plus cabinet/advisors/VIPs was an honest man focused on ushering good governance in spite of powerful resistance to the contrary by his cabinet colleagues.
Few, if any, have taken notice of his other significant and need one add maiden contribution to the politics of this country: resigning because, in his own words, there would have been a conflict of interest had he looked after the affairs of Silk Bank concurrently with holding the portfolio of the Finance. In a country where wearing two hats is common enough, Tarin's decision must be lauded. Sherry Rehman's resignation was tendered on what is widely regarded as a principled stand, a rarity in our politics, but not because she perceived a conflict of interest between her portfolio and her private interests - business or otherwise.
Tarin's explanation is certainly credible. If he began to get involved in the running of Silk Bank - a request to reengage in the bank's running was reportedly made by Tarin's other partners after the bank's fortunes had declined considerably during his absence - then there would clearly have been a conflict of interest. And yet no one in this country seriously considers this explanation as the correct one.
The question is why? Shakespeare in his play Julius Caesar writes "the evil that men do lives after them. The good is oft interred with their bones." This is certainly not applicable to Tarin after his resignation as the country's Finance Minister. The state of the economy for at least 85 percent of the population of this country, after Tarin shepherded the economy for a bit over a year and a quarter, is hardly a cause for celebration: the energy crisis is expected to continue in the third year running (a time period that coincides with the advent of the PPP government); price of utilities increased manifold during his tenure as an outcome of negotiations between the government and the International Monetary Fund (IMF); price of nearly all essentials remain hostage either to powerful cartels or to smugglers operating across the Pak-Afghan and Pak-India borders; meritocracy continues to be ignored and state run autonomous organisations continue to be headed by those who have neither the experience nor the qualifications for the job; scandals related to blatant violation of public procurement rules continue to hit the airwaves with alarming frequency; and with declining productivity it stands to reason that employment levels are declining, though this country does not have the capacity to compile credible unemployment data due to lack of labour exchanges and a thriving parallel economy.
So why is Tarin eulogised in the media? Tarin supporters would, no doubt, argue that the above trends are indicative of continuing state patronage for the rich and influential - a patronage that was not in Tarin's power as a non-political man to effectively challenge. In addition, they may point out that Tarin's responsibility was to ensure that macroeconomic indicators improved and they have improved over the period under review. On the other hand, his critics may well point to the fact that improvements in the macroeconomic indicators have to be sourced to the International Monetary Fund (IMF) programme conditionalities and not to the Finance Minister.
Is his resignation, an attempt by the media to focus public attention on his honesty as opposed to that of his other cabinet colleagues as a number of statements made by Tarin during his tenure as Finance Minister have strengthened the PPP's opponents rather than the government he opted to serve? Those who would respond in the affirmative would cite Tarin's public statements with respect to: (i) the sugar lobby being very powerful and responsible for a dramatic rise in domestic price, (ii) the FBR, as being one of the most corrupt institutions in the country, (iii) the rental power projects requiring third party audit, and (iv) the need to curtail current expenditure, including ending the VVIP culture, which is unsustainable given the country's finances.
The fact that none of these acknowledgements was a revelation and his associated suggestions, barring the third party audit of rental power projects, never saw the light of the day has not deterred the media from eulogising his tenure as Finance Minister. And is ample proof that Tarin's successor would continue to be constrained by periodic artificial shortages generating windfall profits for powerful cartels, resistance by parliamentarians to the end of tax exemptions that are enjoyed by the rich and powerful, the extent of the VVIP culture that permeates the three pillars of our government (executive, judiciary and the legislature), flagrant violation of the public procurement rules as well as open avenues of corruption, nepotism and promotions that are not based on merit.
There are, of course, two other reasons why he will be remembered fondly by the country's economists: the National Finance Commission (NFC) award as well as two publicised agreements, which he spearheaded in an effort to end/reduce tax exemptions enjoyed by the rich and powerful - with respect to the levy of capital value tax on the country's stock markets as well as the imposition of a broad-based value added tax effective from July 1, 2010 as agreed with the IMF.
The question is would he have been able to deliver on these awards/agreements? And more importantly would his successor be able to invoke these agreements and not have to evolve a time consuming consensus again? The NFC award is a landmark judgement and as with all landmark judgements, the list of those who want to take credit is significant, including the President, the Prime Minister and the Punjab Chief Minister with all three having the most to lose and/or gain from such an agreement. In other words, it is highly unlikely that the NFC award would be compromised due to Tarin's departure, though there are questions about the ability of the federal government to meet its financial commitments, both in terms of expenditure and revenue generation, that would release the resources to the provinces as agreed.
However, resistance with respect to ending the tax exemptions have begun to surface less than one week after the resignation of Tarin was accepted by the Prime Minister - individuals in the country's largest stock exchange have begun to challenge the rate at which the CVT would be applied and the chambers of commerce and industry recently refused to implement a broad-based VAT, which was already suspect for one reason: the letter of intent (LoI) submitted by the government to the IMF Board had agreed to allowing the FBR to administer the VAT. However, the Sindh government indicated its unwillingness to allow the FBR to collect GST on services on its behalf.
Tarin's other major legacy is placing the country on an IMF programme that definitely limited his ability to formulate policies without the IMF approval. His sales pitch was: Pakistan had no other option. That is a credible premise given that the Musharraf government had left this hapless country with there unsustainable deficits - budget, current account and trade deficits. Being on the IMF programme, implies little flexibility in terms of policy - be it related to tax proposals, or budget deficit targets or indeed in terms of interest rate regimen, hence Tarin's successor would have little chance of leaving his own imprint on the country's economic policies for the next two years at least - not unless Friends of Democratic Pakistan (FoDP) begin to meet the pledges made in Tokyo.
However to reiterate what has overwhelmed this nation is Tarin's honesty throughout his tenure, his exit which was on his own terms, a rarity in this country, and his statements, challenging non-transparent decisions by his cabinet colleagues. He would be long remembered.