There is no smoke without fire. Market is ripe with rumors that Finance Minister Asad Umar is being replaced. The government even the minister himself contradicted the reports. “The fake news are part of a propaganda to fail you and to distract you from your job, you must not pay attention to this garbage and continue your work as finance minister,” Asad Umar said quoting PM Imran Khan.
Analysts believe that Asad Umar has not failed as the finance minister, but he is between a rock and a hard place.
The rumors took to the air after stock market guru Aqeel Karim Dhedhi (AKD) held a media talk criticizing the economic and other policies of the government and reminding Imran Khan of his promises made to the business community.
Former CEO of Engro Corporation Asad Umar, a businessman himself, does not want to offend the business community, particularly those associated with the financial markets. It was after the 150bps hike in interest rates that AKD held a press conference, rumors of Asad’s removal made to the media and equity traders voiced their concerns rather loudly.
Although, the industrialists and exporters had been decrying the rupee devaluation, higher utility prices and rising cost of doing business, but it was taken lightly or so it seemed.
Now, on the other hand, the dictations coming from the Prime Minister Secretariat or some may say the dictations being routed through the Prime Minister Secretariat are getting harder to be complied with.
The masses, industry and business community can only absorb so much. The first 100 days of PTI government opened a flood gate of unpopular reforms including 2.5bps hike in policy rates and Pakistani rupee depreciating by around 10 percent.
Where the current government is to be faulted is for how it has handled the crisis it inherited. The government seems to be making policy decisions on the fly.
“If the government is already turning on its own finance minister, and if he himself is turning to happy talk to make the ill winds go away, then it only means these guys have neither the stomach nor the brains for the job ahead,” Economic Analyst Khurram Hussain said.
In case Asad Umer is replaced with former Governor State Bank of Pakistan (SBP) Shamshad Akhtar as propagated, the move would further hurt PTI’s popularity anticipating even rigorous monetary reforms.
“Economy needs to progress on a set of new elements of requisite reforms, which include streamlining tax system, improvement in the banking system, easing the procedures to do business, improving competitiveness and promoting trade facilitation through trade regulation,” she sugar quoted tough measures speaking at the inauguration of the 11th South Asia Economic Summit in Islamabad.
A lack of transparency is the defining feature of the government’s handling of the economic situation. The country was told that disaster was averted after Prime Minister Imran Khan secured $6 billion in funding from Saudi Arabia. That money has not yet arrived and indeed no MoUs were signed with the Saudis. It is unclear what help, if any, China will be providing. The market reacts to such uncertainty and the reaction is always ugly. The government is certainly in a difficult position, having to backtrack on all its previous promises.
Whoever may be responsible, the economy is in a mess, and replacing Asad Umar even with Shamshad Akhter is not going to help, in the short to medium term at least.
In a speech marking his first 100 days in office, Imran said any agreement with the IMF would be made keeping in mind the interests of the people and that he would not hide behind the IMF. However, appointment of Shamshad Akhter for the finance ministry, if it happens, would prove otherwise.
Many blame Ishaq Dar for landing the country in this economic and financial crisis, but at the same time a man like Ishaq Dar is needed to sail the country through this rough sea.