Daily Times

Given his build-up, one could predict as early as April 2012 that Asad Umar was going to be the federal finance minister whenever Pakistan Tehreek-i-Insaf won an election and formed a government. From grassroots PTI workers, of who many showed no signs of understanding macro-economics, to Imran Khan himself, everybody swore by his business acumen. Once the party took power in August 2018, there was little doubt about who the new finance minister was going to be.

To his credit, he had been a vocal parliamentarian who often impressed the gallery with his criticism of the government and seemed to know a thing or two about what was wrong with the house that Ishaq Dar had built. He was also a darling of the mainstream media as well as an influential opinion leader on the social media.

The minister’s first job was to inform the public and the media how poorly the economy had been managed before he took over. Given that the argument was well rehearsed, this part was easy. The momentum in the media too favoured him.

Given the twin burden of recent incumbency and his problems with the National Accountability Bureau, Dar was in no position to fight back. There were undeniable problems like a huge foreign debt and the yawning current account deficit. A lot had already been said and written about Dar’s approach of consistently seeking what looked like brilliant short-term solutions at the cost of long-term sustainability.

But it was also clear to almost everybody that there was little time to lose. The new minister had to take some difficult decisions and take them fast. This is where Asad Umar was found wanting. He was expected to quickly lay down his reform agenda. Almost as importantly, it was clear that Pakistan was going to need a bailout package from the International Monetary Fund. Mr Umar dithered.

This created the impression that the PTI, in general, and the finance minister, in particular, were not quite prepared for the role they found themselves in. While everybody agreed that the rupee had been propped up artificially and needed devaluation, the way it was done left much to be desired. There was always the argument that a reasonable devaluation would help boost exports. However, the devaluation came far too quickly for the exporters to make adjustments and benefit from it. Next, the gas companies were allowed to pass their debt burden to the consumers. This fuelled inflation and was a very unpopular measure.

The IMF deal needed to have been negotiated urgently. It was delayed in the vain hope that this would improve the context in the borrower’s favour as pledges of assistance were received from friendly nations. The mistake would cost the minister dearly

The IMF deal needed to have been negotiated urgently. It was delayed in the vain hope that this would improve the context in the borrower’s favour as pledges of assistance were received from friendly nations. The mistake would cost the minister dearly. It is rather well known that assistance from international lending agencies like the IMF, the World Bank and the Asian Development Bank has a vital role in stabilizing the economies of developing nations like Pakistan. Many international investors tend to watch their attitude towards developing nations before finalizing investment decisions. To Mr Umar’s chagrin, some people in the media started comparing his performance to that of Mr Dar.

As a shadow finance minister Mr Umar had been a regular critic of the Federal Board of Revenue. However, the only thing he appears to have accomplished there has been the separation of the policy and implementation wings. Whether this will make the FBR a more efficient organization or not remains to be seen.

The business class, meanwhile, is annoyed at the lack of meaningful consultation. Business leaders complain that in the absence of regular interaction with finance minister they are in the dark about the direction of the policy regime.

The uncertainty was the primary reason behind the finance minister’s fall. His sluggish decision making was blamed for the edge to inflation and for the low revenue collection.

Meanwhile, the global economy, too, is showing signs of a slow-down. Pakistan is in dire need of structural reforms. The government is seen to have acted only when its hand was forced. Some political analysts have attributed his ouster to a foretold plot. However, the question is for how long can a policy maker survive on blaming his predecessor?

The prime minister and his new adviser need to act quickly. The IMF loan will provide some breathing space. It must be used to initiate the necessary structural reforms. The government is due for some tough decisions. It must not shy away from them.

The writer is a freelancer