201904 Asad Umar1
File picture of Pakistan's Finance Minister Asad Umar. Image Credit: AP

Dubai: Taking markets by surprise, Pakistan’s Finance Minister Asad Umar resigned on Thursday amidst allegations that he had failed to take the country out of a severe economic crisis. He announced the resignation on Twitter after Prime Minister Imran Khan asked him to step down from the current position and instaed take up the energy portfolio.

Instead of accepting the offer, Umar opted to step down from the cabinet. Umar, who was pitched by Imran during his election campaign as the “only financial expert” to revive the debt-ridden economy, failed to produce desired results. Even supporters started pointing fingers at his performance, and this was compunded after he failed to broker a deal with the IMF for a bailout.

The government is facing increasing public anger over rising utility prices, many of which were subsidized by earlier governments. “As part of a cabinet reshuffle, PM desired that I take the energy minister portfolio instead of finance. However, I have obtained his consent to not take any cabinet position. I strongly believe @ImrankhanPTI is the best hope for Pakistan and inshallah will make a Naya Pakistan,” Umar said on his Twitter handle.

Later, he told a press conference that it was time to make some “difficult decisions” to stabilise the economy and that he hopes his replacement would be supported in their efforts. ““This does not mean that I am not available to forward PTI’s vision for “Naya Pakistan”. I am and will always be available to forward the interests of this country.” Umar joined Imran’s party Pakistan Tehreek-e-Insaf (PTI) in 2012.

Finance Minister’s resignation amidst IMF talks and just two months ahead of June budget is a big blow to Imran’s government.

“I believe that this decision should be made as soon as possible... we are about to go to the IMF, we are about to present the budget. This is already too late, the next person should have come in earlier, at least a month ago,” he added.

Umar’s decision comes as he led negotiations for what would be Pakistan’s 13th IMF support programme since the late 1980s. Since taking over as finance minister, the former CEO of Pakistani conglomerate Engro Corp. was subjected to a campaign of negative media coverage from unnamed government sources. That had fueled prolonged speculation that he would be moved from the finance ministry as the economy faltered.

Pakistan’s credit score was downgraded by S&P last month, which cited deterioration in economic outlook and delay in securing IMF help. Since coming to power in August last, the government has faced a balance-of-payments crisis and a depleted treasury that thwarted plans to expand social welfare support across the nation.

Islamabad secured a temporary reprieve thanks to loans and funding from the likes of Saudi Arabia and the UAE. Pakistan announced last week that it had reached an agreement with the IMF for a bailout ranging from $6 billion to $8 billion.

“Technical details and formalities will now be finalised during the IMF’s staff level visit to Pakistan later this month,” Mohammad Azhar, Pakistan’s State Minister for revenue tweeted early this week.

Pakistan’s central bank last month lowered growth forecasts and raised interest rates at a time when inflation is at a five-year high. The Pakistani rupee has also lost about 35 per cent since December 2017.

Growth forecast

The central bank forecasts growth at 3.5-4 per cent in the 12 months to end-June, well short of a government target of 6.2 per cent. The IMF paints a gloomier picture, predicting Pakistani growth of 2.9 per cent in 2019 and 2.8 per cent the following year.

Inflation was over 9.4 per cent in March, the highest since November 2013, with strong increases in food and energy prices.