Pakistan’s finance minister resigned on Thursday following widespread criticism over the country’s economic crisis and his handling of a bailout deal with the IMF.
Asad Umar’s departure comes amid frustration from business leaders and opposition politicians with Islamabad’s decision last year to turn to countries including Saudi Arabia and China for at least $7.2bn in short-term loans instead of securing an IMF bailout package.
But persistent economic weakness has driven Pakistan back to the fund and Islamabad said this week that the country had reached an “agreement in principle” with the IMF after a delegation returned from Washington.
The package would be the country’s 13th IMF bailout since the late 1980s.
Since coming to power eight months ago, Prime Minister Imran Khan’s new government has wavered on crucial economic reforms. Pakistan’s gross domestic product growth is expected to slow to about 3.5 per cent this year from 5.2 per cent in 2018.
“My captain didn’t see me fit for the role, we had the discussion and that’s that,” said Mr Umar referring to Mr Khan, Pakistan’s former cricket captain, after announcing his resignation. Mr Umar was a key figure of Mr Khan’s ruling Tehreek-e-Insaf (PTI) party.
Mr Umar defended his handling of the IMF bailout, saying he had “finalised the IMF agreement on much better terms than before”.
“It was the worst economy that we inherited,” said Mr Umar. “We’ve seen improvement, but we are nowhere near an ideal situation.”
A Karachi-based chief executive said the government had been too slow to respond to the economic situation. “This government has been around for eight months and they still haven’t negotiated an IMF loan,” he said. “In the end I think the prime minister realised that this ‘go-slow’ mode advised by Asad Umar was not the right choice.”
Pakistan’s inflation is at a five-year high of more than 9 per cent, while the rupee’s value has plummeted 33 per cent since 2017. Mr Khan’s government was reluctant to agree to the IMF’s proposed measures such as a free float of the currency, which would result in further devaluation, and structural chances including widening the tax base.
“The solutions are not going to be easy. The choices will be politically difficult for any government,” said Abid Suleri, an economic adviser to Mr Khan.
The shake-up has created chaos at the finance ministry weeks before the government was scheduled to release its first budget, according to a senior civil servant.
“At a time when we need clarity on the way forward, the finance minister’s departure will only create uncertainty,” he said. “The public will see this as evidence of disagreement and disunity in high quarters of the government. It’s not a good image.”
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