ISLAMABAD: The Finance Ministry, Information Minister Fawad Chaudhry and PTI’s senior leader Jahangir Khan Tareen on Monday rejected ‘rumours’ that Finance Minister Asad Umar had offered to resign from his office after he was criticised by Prime Minister Imran Khan for giving a free hand to the State Bank of Pakistan (SBP) to devalue the currency at will.
The decision to allow free fall of rupee value cost Pakistan heavily as the stock market fell 3.1 per cent on Monday after the SBP hiked its policy interest rate by 150 basis points to 10 per cent on Friday and sharply cut its economic growth forecast. The benchmark 100-share index of the Pakistan Stock Exchange was down 1,274.50 points by 11.53 am, trading at 39,221.53 points.
The stock market’s decline follows extreme volatility in the currency market on Friday when the rupee plunged more than 6 per cent at one point before paring a chunk of the losses. The rupee was trading 1 per cent weaker on Monday, at about 137.5 per dollar.
Well-placed sources in the Ministry of Finance claimed that the minister got emotional and offered to resign during a meeting with Imran Khan, adding that Umar was unhappy over criticism by former PTI secretary general Jahangir Khan Tareen. Adviser to the PM on Commerce Abdul Razzak Dawood also shifted the blame on the finance minister which further infuriated him, sources claimed, while requesting not to be named.
They added that the prime minister was unhappy over why such a major policy decision had been taken without even taking him in the loop.
PM Khan then invited a select group of anchorpersons to clarify the situation, saying that he was kept aloof and “autonomous” SBP had taken the decision.
As a damage-control measure, the Finance Ministry also released a clarification that Asad Umar had not resigned. The official statement blamed “certain elements” for trying to spread disinformation to achieve their objectives. However, the official statement provided required meat for the analysts and commentators by admitting differences between the PM and Asad Umar, stating that “healthy debates are a part of political culture,” but added that the minister had no plan to quit.
“It seems as if Asad Umar is behaving like a bull in a China shop. His lack of experience and flawed handling of the economy is costing Pakistan heavily,” an official at the Finance Ministry commented.
Jahangir Tareen also denied reports of having a verbal spat with Umar that reportedly led to the latter’s offer to resign. “Reports of disagreement between me and Asad Umar are fabricated,” Tareen said in a statement to media.
Information Minister Fawad Chaudhry also termed such reports as “mere rumours”. He urged the media outlets to avoid spreading news without confirmation as such fabricated news could have a negative impact on the national economy.
‘IMPOSSIBLE FOR SBP TO MAKE SUCH MOVE’:
Meanwhile, former finance minister Shaukat Tareen said that the rupee dive should have been by design but the central bank should not give such a huge plunge in one go. He said the SBP could not have taken such a big decision without taking the federal government into confidence.
“It is literally impossible for the central bank to devalue rupee price for eight rupees. Yes, they must have taken the government into confidence at some level. They may not have given specific information but indications would have been made,” he added.
Commenting on the issue, Tareen said that his point was that the central bank should not give such a spike in one go. Rather, he added, even if it is necessary, the fluctuation should be given for 50 paisa and the movement should be both ways. Means, they should dip and raise rupee price gradually, he said.
The former finance minister said that the one-way movement of rupee price would allow speculators to manipulate the market.
“This is why I would say that movement of rupee price should be both ways. It would cut speculators and would rather bring in market stability.”
Tareen admitted that the direction of PTI government should be clear and that the government should come clean on its plans whether or not to go to the IMF.
“I think that the government should tell the public if it plans to go to the IMF. It would help stabilise the market. Everyone would know that a programme is in the pipeline and dollar price would be stable in a certain point of time,” he concluded.