Pakistan’s finance minister resigns ahead of IMF deal

Pakistan’s finance minister Asad Umar has stepped down, he announced Thursday, with no replacement yet named as Islamabad seeks a crucial bailout deal with the International Monetary Fund.

Umar, one of cricketer-turned-premier Imran Khan’s most powerful ministers, had been entrusted with the task of negotiating the long-delayed bailout as Pakistan’s cash-strapped economy faces a balance-of-payments crisis.

His abrupt resignation comes as Khan’s government, which came to power last year, faces growing pressure with the rupee losing 30 percent of its value since the start of 2018, stirring sharp inflation.

“As part of a cabinet reshuffle, PM desired that I take the energy minister portfolio instead of finance,” Asad Umar tweeted.

“However, I have obtained his consent to not take any cabinet position. I strongly believe @ImranKhanPTI is the best hope for Pakistan and inshallah (God willing) will make a naya (new) pakistan,” he wrote.

An IMF forecast suggests the Pakistani economy is likely to grow at around 2.9 percent this year, compared to 5.8 percent growth in the last fiscal year© AFP/File ASIF HASSAN

There was no immediate statement from Khan’s office or confirmation of who would replace Umar, and it was not clear how Umar’s absence would impact any IMF deal.

A new finance minister will have to look after a “difficult economy”, Umar told a hastily assembled press conference in the capital Islamabad shortly after the tweet announcing his resignation.

“We need to take some difficult decisions and we need to show some patience,” he said, appealing to the public to “stand with” the new finance minister.

“Don’t expect that there will be miracles and rivers of honey and milk will start flowing in the next three months,” he warned.

‘Tough decisions’

Economist Muzammil Aslam said Umar had taken “tough decisions” to fix the economy.

“In my view, he has become a political victim and a scapegoat to neutralise the pressure,” said Aslam, who heads Emerging Economics Research, a Karachi based company.

Pakistan has gone to the IMF repeatedly since the late 1980s, and last received an IMF bailout in 2013 to the tune of $6.6 billion.

Umar has said often that a deal is coming soon, and that it will be the last one.

Earlier this week Hammad Azhar, a state minister for revenue, tweeted that Umar had reached an “agreement in principle” on an IMF deal during a recent trip to Washington, with the agreement to be finalised later this month.

Umar is one of the most powerful ministers of cricketer-turned-premier Imran Khan© AFP/File AKRAM SHAHID

But experts have warned that any tough measures imposed by the IMF could impact Khan’s grand plans for an Islamic welfare state in Pakistan.

An IMF forecast suggests the Pakistani economy is likely to grow at around 2.9 percent for the fiscal year ending June 2019, compared to 5.8 percent growth in the last fiscal year.

The government is already suffering a backlash. The rupee has been repeatedly devalued, sending inflation to 9.4 percent, as discontent rises along with prices of consumer goods.

The United Arab Emirates, Pakistan’s largest trading partner in the Middle East and a major investment source, recently offered $3 billion to support Pakistan’s battered economy.

Islamabad also secured $6 billion in funding from Saudi Arabia and struck a 12-month deal for a cash lifeline during Khan’s visit to the kingdom in October.

It has also received billions of dollars in Chinese loans to finance ambitious infrastructure projects.

At the press conference, Umar said he had first been informed that Khan wanted him to take over the petroleum ministry the previous night.

He dismissed rumours which rapidly began circulating about his removal in a country which has long been caught in a tussle between civilian and military power.

“I am not aware of any conspiracies,” he said, adding that he will remain in Khan’s Pakistan Tehreek-e-Insaf party.