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The writer is a former caretaker finance minister and served as vice-president at the World Bank
I have drawn upon this account from the memoirs on which I am working these days because of its relevance for the times through which Pakistan is currently passing. In November 1996, I received a call from then President of Pakistan, Farooq Leghari, who I had become good friends with while both of us were students in the early 1960s at Oxford. He told me that using Article 58.2(b) in the Constitution which had been inserted by President Zia ul Haq, he had fired Prime Minister Benazir Bhutto along with her cabinet and ordered new elections in four months’ time. He asked me to take the next flight to Pakistan and join the interim government that he was going to swear in under the leadership of Meraj Khalid who had long been a member of the Pakistan People’s Party, the PPP, to which Bhutto belonged. I said I couldn’t do that as that would hurt my career at the World Bank. Besides, my wife Jahanara, was not prepared to return to Pakistan.
He asked me for President Conable’s telephone number which I gave. Half an hour or so later, the Bank’s president called me. When I went to his office, Ibrahim Shihata, the Bank’s senior legal counsel, was sitting with him. “I heard from the President of Pakistan that he wants you to go to Islamabad for a period of four months to serve as finance minister, but you said that you couldn’t do that as that would disrupt your career at the Bank. Both Ibrahim and I are of the opinion that you should accept the invitation. We will prepare a note for our board to get their approval so that a four-month absence would not affect your Bank career. The only thing you will not be able to do is to draw your salary from the Bank.” I accepted that proposal and set out for Pakistan a couple of days later.
It was Friday when I arrived early in the morning and was received at the Islamabad airport by some officials from the Ministry of Finance and driven to the Ministry of Finance in the Secretariat. Mueen Afzal, who was then serving as Secretary General of Finance, was waiting for me on the fourth floor and greeted me warmly when I emerged from the elevator. He walked me over to what was going to be my office. Before leaving me, he said that I had come at a very difficult time for Pakistan. “We have borrowed $300 million from the military to stay afloat,” he told me.
Working all day, I went late in the evening to the living quarters I had been assigned. This was in the annex of the Sindh House in Islamabad. While I was in the shower I heard somebody come into my room and leave a few moments later. When I came out of the bathroom, I saw a brown envelope lying on the pillow of my bed. It was marked “secret” all over. I opened the envelope and found an official later from Muhammad Yaqoob who was then Governor of the State Bank of Pakistan. The letter said that on Monday — that is to say three days later — we won’t have the money in our coffers to pay what was due to the IMF and the World Bank. We would, in other words, default on what were called in the financial world as “preferred creditors.” Having worked as the Vice President of Latin America at the World Bank, I had witnessed the consequences of such a default of two countries in the sub-Continent.
Not being able to sleep after this grim news, I called President Farooq Leghari on the phone who said that I should go over to the Presidency an hour later after he had said his morning prayers. I did so and was amazed to learn that Governor Yaqoob had not kept him informed of the situation. We then discussed what we could do to save the country from that situation. He said that since I was a senior official at the Bank, I could get some temporary relief from that institution. I suggested that he approach some Arab nations with whom he had good relations. He said that he would not be able to do that.
I then told him of the conversation I had with then-prime minister of China when I was leaving the China Department on promotion, having served for last eight years, from the spring of 1987 to January 1994. During that time, I had helped China deal with what came to be called the Tiananmen Square Crisis. This I had done even at the risk of losing my job in the Bank. In my farewell meeting with the Chinese prime minister, he had said if there is ever anything they could do for me I should not hesitate to make the call. Leghari said I should work on that invitation which is what I did.
I arrived in Beijing by the presidential plane and met with the prime minister and asked him for a loan of one billion dollars. He said that that was a lot of money and would check it out with President Jiang Zemin who I had come to know when he was the mayor of Shanghai. I was asked to stay an extra day and have dinner the following evening with the prime minister. At the dinner, the prime minister said if I had Pakistan’s account number at the Federal Reserve Bank in New York, a deposit of $500 million would be made before the dinner was over. Yaqoob had written by hand the account number which I had in my pocket.
I gave the slip of paper to the Chinese prime minister. I needed $250 million to service Pakistan’s accounts at the IMF and the World Bank. The extra $250 would provide additional relief. It turned out that the number Yaqoob had written for me was not correct and the amount could not be transferred. That was done when from Islamabad I gave Beijing the correct number and the promised amount was received in time for us to make the due payments. Why Yaqoob had given me the wrong number is another story I will relay some time.
