The resignation of Finance Minister Asad Umar and the accompanying cabinet reshuffle has generated a lot of controversial heat in the country. While the government spokesmen have defended and justified the decision, the opposition parties have used it to criticize Prime Minister Imran Khan and describe his running of the country’s affairs as a failure. One reason for the brouhaha is that Asad Umar’s resignation came only days after strong denial by the government that any such thing was happening.
Asad Umar’s eight-month term as finance minister saw the economy sinking deeper into recession. He has the unique distinction of presenting two minibudgets within one financial year without authoring an annual budget. His term saw the economic growth rate fall from a 13-year high of 5.8% to an estimated under 4% by the end of the ongoing fiscal year. Inflation is also estimated to be the highest ever in a decade. Under his ministry the rupee rapidly lost its value and the process of slippage has not stopped. Unprecedented price hikes upset the average household budget.
Asad Umar was a close, loyal friend and jettisoning him must have been a painful decision for Imran Khan. But the gloomy economic indicators as well as the rising crescendo ofcriticism from the opposition and the media ultimately forced the prime minister’s hand. It is also no secret that Asad Umar was facing criticism even from within the party.
According to some analysts, Asad Umar’s departure indicates that the reform-oriented wing of the PTI is going to take a backseat for the foreseeable future, and Pakistan’s economic future will be managed by those who are the guardians of the status quo. Umar had his own faults and failures, but insiders say that his efforts were undermined by the conservative lobby within the party.
There is little doubt that the PTI has inherited an economy which is on the verge of collapse. It had been predicted months before the elections. But it now seems that neither Imran Khan nor Asad Umar and others had truly fathomed the seriousness of the fundamental issues until they came to power. The main challenge was to stabilise the economy and bring certainty to the market, while pushing through tough decisions during the first 100 days. But the PTI failed in its task, with each passing day, adding more to the existing basket of problems.
Umar had inherited a difficult situation, but it was not impossible to handle. Basically, there was no direction as far as the economy is concerned. Asad Umar was no economist and did not develop an overall design. So, most of the time he was engaged in firefighting. He did not seem to be in control of the situation. Uncertainty is the worst thing that can happen to an economy — and that is what happened. No one knew where the economy was going. He failed to give the needed sense of confidence to the markets and to the general public that the things could be fixed.
In the opinion of some analysts, Umar, being finance minister, should take the main blame, but Imran Khan as the team leader cannot be absolved of his responsibility. The finance ministry is the most important portfolio in the cabinet, but it is also something to do with lack of direction and faulty policies at the highest level.
At the very beginning, Imran made some mistakes that affected the working of the finance ministry. He set up an Economic Advisory Council with some good people in it, but under pressure from conservative lobbies, he removed some of the best-known economists in the world. After that, no economist of repute was prepared to work with Imran Khan and his government. He had ample room to improve the performance of the finance ministry as well as other ministries. But due to his strong-headedness, he failed to do so.
The major problem with the present government is that there is a lack of a sense of direction. Imran Khan’s choice of persons has been open to question as evidenced by the appointment of Usman Buzdar to head the Punjab government. The same goes for some other appointments. But since he is the ultimate boss and repository of all power, nobody in the party can question his decisions.
The man chosen to replace Asad Umar is Hafeez Sheikh, who has spent long years working with the World Bank. It is said to be a major factor in his elevation to head the finance ministry, at a time when an IMF programme is in the works. During General Pervez Musharraf’s era, Hafeez served as finance minister. His last assignment was as the federal minister for finance in the last Pakistan Peoples Party (PPP) government. During 2010-13, when he held the portfolio, he could not do much to steer the economy out of the woods and was the butt of severe criticism from the opposition. It remains to be seen how he fits into the PTI’s framework of governance.