Story highlights

Abdul Hafeez Shaikh is a former Harvard professor and World Bank economist

Pakistani law requires the cabinet to step down and a caretaker government formed

Nation's weak finances are one of many challenges the next government will face

National elections are seen as an encouraging sign in a country accustomed to coups

Pakistan’s finance minister resigned Tuesday, the government said, just months ahead of fiercely competitive national elections in what is expected to be the country’s first civilian democratic transition of power.

Pakistan’s Prime Minister Raja Pervez Ashraf said Abdul Hafeez Shaikh left his post after “spearheading the country’s economy out of difficult times.”

Shaikh, a former Harvard professor and World Bank economist, took office in 2010 on the heels of an economic crisis that prompted Pakistan to accept an $11 billion bailout package from the International Monetary Fund.

Pakistani law states that the cabinet must step down and a caretaker government must be formed for 90 days before an election can take place.

“It could be the case that he now steps in as a caretaker prime minister,” said Brookings Institution senior fellow Stephen Cohen.

“He would be someone who would be a favorite of the PPP,” added Marvin G. Weinbaum of the Washington-based Middle East Institute, referring to the country’s ruling political party.

Analysts say the country currently has only enough foreign reserves for a few months of imports, while the Pakistani currency has hit nearly 100 rupees to the dollar.

“The economy generally is in very, very poor shape,” Weinbaum said. “They are trying to get the IMF to reschedule loan payments, while the IMF has been insisting on reforms.”

Shaikh has been at the center of pushing those reform efforts, which have been met with only limited success.

The next government faces a myriad of problems, including increasing security concerns, a relatively tiny tax base despite the country’s large population and a lack of energy production that leaves many in the dark.

National elections, which are expected to be held in the spring, are seen as an encouraging sign in a country accustomed to coups.

No formal date for elections has been set.