31 January 2014 

PTI expresses serious concern over the manner in which a presently headless ECP is working

Today, PTI MNA Asad Umar, stated that the resignation of the governor state bank under alleged political pressure from the government raises very serious concerns. According to him, it is indicative of an attempt by the govt to subvert the independence of the state bank and the govt’s intent to use the banking system for political gain.

Asad Umar said the resignation of the state bank governor in the context of a situation where critical regulatory bodies like NEPRA, SECP and CCP are without full time chairmen should be of grave concern to those who have any interest in or care for the economy of pakistan. This shows the disdain of the current govt for any regulatory oversight of the economy.

Asad Umar felt that powerful independent regulatory agencies are essential to safeguard the interest of citizens and protect them from being exploited by unscrupulous elements. The deliberate attempt by the govt to weaken regulatory authorities is yet another proof that this govt is only interested in protecting and promoting the interests of powerful lobbies rather than welfare of the people of pakistan.

Asad Umar demanded that the govt must ensure that the nomination of the new governor state bank is seen as being done on merit and the position is not filled by anyone who is considered to be close to the ruling party or the prime ministers family. This crucial position must be filled by someone who is seen as experienced, professional and independent.

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Tiff with finance minister

? State Bank governor’s resignation accepted

ISLAMABAD: January 31, 2014

The government on Thursday accepted the resignation of State Bank of Pakistan (SBP) Governor Yaseen Anwar. “The federal government has accepted the resignation of SBP Governor Yaseen Anwar with effect from January 31, 2014,” a brief statement issued by the Ministry of Finance read. “The decision regarding the acting SBP governor will be made today (Friday),” it added.

According to Umer Siddiqui, the SBP spokesperson, Anwar resigned for personal reasons. “He wanted to give more time to his family after his son was seriously injured in a road accident,” Siddiqui said. Anwar served as head of the country’s central bank for two years. Sources, however, said Anwar decided to quit after he found himself unable to get along with Finance Minister Ishaq Dar. He resigned from the post after he was assured he would not be barred from leaving the country, they added. Anwar’s family is settled in Singapore.

The PML-N government originally planned to replace Anwar in October last year. The decision was delayed because of the first review of the IMF loan programme and Anwar’s insistence that he not be pursued legally for any of his actions as SBP governor, sources in the Finance Ministry told The Express Tribune. A senior government functionary said Anwar never proved himself a good administrator during his tenure. According to sources, he was accused of not doing enough to crack down on exchange market speculators.

Reportedly, Anwar was also uneasy with the finance ministry after it began calling the shots in the central bank on a day-to-day basis. SBP officials said one of the bank’s three deputy governors would likely take charge of SBP as the acting governor. The usual practice, they added, is to appoint the senior-most deputy governor as the acting governor. Kazi Abdul Muktadir is the senior most deputy governor followed by Ashraf Wathra and Saeed Ahmed.

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State bank governor Yaseen Anwar resigns

January 30, 2014

ISLAMABAD: The Federal Government has accepted the resignation of Governor State Bank of Pakistan (SBP) Yaseen Anwar with effect from January 31, the Federal Minister for Finance Senator Ishaq Dar announced on Thursday.

The decision over a new Acting Governor SBP will be made on Friday, Dar said, according to a statement issued by the Finance Ministry. Sources hinted that the governor was under pressure from the ministry of finance, which appears to be hell-bent on heavy borrowing from the SBP as well as commercial banks. However, the official reason given for Anwar’s resignation was that his son had recently suffered an accident.

Anwar was appointed SBP governor in July 2011 after former SBP governor Shahid Kardar stepped down from the position amidst rumours that he had developed differences with the ministry of finance. Kardar’s predecessor, Saleem Raza, had also resigned after only 16 months in office. News of Anwar’s prospective appointment as the governor in 2011 had been received with mixed reactions with experts viewing it as an attempt to whitewash financial affairs of the then Pakistan Peoples Party-led government.

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Pakistan Bank Chief Quits as Economy Stalls

By SAEED SHAH

Jan 30, 2014

ISLAMABAD — The head of Pakistan’s central bank, Yaseen Anwar, resigned Thursday, the government said, on the eve of a review of the country’s performance by the International Monetary Fund.

“He has resigned for personal reasons,” said Shafqat Jalil, a Finance Ministry spokesman. He didn’t explain further. Mr. Jalil said an acting governor would be appointed Friday. Mr. Anwar had been governor of the State Bank of Pakistan since October 2011. His resignation comes as the economy faces soaring inflation and a sharply weaker currency. In a written response to The Wall Street Journal, Mr. Anwar said a recent accident suffered by one of his sons “compels me to move on and join my family in Singapore.”

He said that, with previous stints as deputy governor and acting governor, he had served almost seven years “through very challenging times amidst global financial turmoil.” He added that he felt “professional gratification” at having met IMF benchmarks at the last review that “will support financial stability going forward.” Foreign-exchange reserves are critically low. The country missed its target for foreign-currency reserves at the previous IMF quarterly review and was given a waiver on the issue.

The IMF agreed to a $6.7 billion bailout in September, but has released only roughly $1.1 billion of the three-year loan. Officials from the central bank are to meet IMF representatives starting Saturday in Dubai, to begin the second quarterly review, a process that would involve the head of the central bank in the coming days. The IMF’s quarterly reviews are designed to ensure the country meets its bailout conditions. If the IMF finds Pakistan is failing to meet its bailout targets, future tranches could be in jeopardy, which would put the economy further at risk.

“The timing of this resignation is unprecedented, just before the second review,” said a retired senior official. “It affects the credibility of the whole process.” A focus of the review will be Pakistan’s net foreign-exchange reserves. The volatility of the rupee has been a source of tension between the central bank and the government, analysts said. Mr. Anwar was widely criticized for his handling of the foreign-currency markets, an issue on which Finance Minister Ishaq Dar has personally intervened. Mr. Anwar, a former investment banker, was appointed by the previous government, of the Pakistan Peoples Party.

The current administration, led by Prime Minister Nawaz Sharif took office in June. In recent years, heads of the State Bank have come under pressure to increase lending to successive governments, to finance their budgets, an issue that may have contributed to the departure of previous recent central bankers. “The Ministry of Finance does whatever it likes and the State Bank is expected to accommodate,” said Zubair Khan, a former finance minister.

Mr. Khan said Pakistan urgently required the IMF to increase the rate of disbursal of its loan, saying the current program was based on “unjustified optimism.” Pakistan is struggling with economic and security challenges. While Mr. Sharif’s administration is considered business-friendly, analysts say its economic plans require an improvement in the security situation. There has been a sharp increase in attacks by the Pakistan Taliban since the new government came to power.

The government’s economic agenda includes large-scale privatizations, raising tax revenues, boosting private-sector investment, and fixing the broken electricity-supply network. However, this agenda requires greater confidence from the private sector, which is difficult while there are almost daily attacks by militants, analysts said. The country’s economic hub, Karachi, remains beset by criminals and Islamist militants. Mr. Sharif launched a crackdown by security forces in Karachi in September, aimed at cutting street crime, kidnappings and extortion demands on business.

Pakistan’s tax revenues are less than 9% of GDP, one of the lowest such ratios of any country with a supposedly functioning state. Last year, less than one million of its 180 million people paid income tax, according to the tax authorities. The withdrawal of government subsidies, especially from electricity costs—one of the requirements of the IMF program—has resulted in an increase in the inflation rate in recent months. The State Bank forecasts that inflation will remain in double digits this year.

Farrukh Khan, head of research of KASB, a brokerage based in Karachi, said that inflation was now steadying, while other indicators were also more positive. “The ship is turning around. It will take some time,” said Mr. Khan. “There are definite signs of improvement.” The IMF, after its first quarterly review, found Pakistan’s performance “mostly satisfactory.” It is forecasting GDP growth of 2.8% for the current financial year. However, the IMF had also found that “the balance of payments outlook has worsened and firm action is required to address critically low foreign-exchange reserves.”

Write to Saeed Shah at saeed.shah@wsj.com

http://thefrontierpost.com/article/72090/State-Bank-governor-resigns-ahead-of-IMF-loan-review/

State Bank governor resigns ahead of IMF loan review

2014-01-31

State Bank of Pakistan (SBP) Governor Yaseen Anwar. PHOTO: AFP

ISLAMABAD (AFP) – The governor of Pakistan s central bank has resigned, finance ministry officials said Friday, on the eve of an International Monetary Fund review into a $6.7 billion bailout loan. Yaseen Anwar was appointed governor of the State Bank of Pakistan in October 2011. He resigned on Thursday citing personal reasons, finance ministry spokesman Shafqat Jalil told AFP. The IMF approved the package for the country in September last year, subject to strict economic reforms, particularly in its troubled energy sector and tax system.

Finance ministry officials confirmed that talks between Pakistan and IMF officials for the third tranche of $545 million were due to be held from Saturday in Dubai. “The resignation of the SBP governor is not going to have any impact in our review talks with the IMF,” a senior finance ministry official told AFP.

“The talks would focus on the review of economic situation of Pakistan in the second quarter (October-December),” the official said. “The government has fulfilled all the conditions under the IMF’s Extended Fund Facility and we hope to get the funds by March,” the official added. The announcement of the appointment of a new governor was expected later Friday, the finance ministry spokesman said. Leading English newspaper The News quoted Anwar as saying that he stepped down to spend more time to his family.

“There are personal reasons and particularly due to recent injury of my son that compels me to move and stay together with my family especially after having served at SBP for almost seven years as governor and deputy governor through very challenging times amidst financial turmoil globally,” The News quoted Anwar as saying. Analysts said that with his resignation, long-drawn confusion over fiscal policy in Pakistan would come to an end.

Anwar had been appointed by the previous Pakistan People s Party government, and a change at the head of the central bank had been seen as inevitable since Prime Minister Nawaz Sharif of the Muslim League took charge in June. “His resignation was expected because of the political change in the government” said Taha Khan, head of research at Taurus Securities. “There were some policy differences as well between the ministry of finance and the SBP” he said.

Cash-strapped Pakistan, plagued by a bloody homegrown Taliban insurgency, is battling to get its shaky economy back on track and solve a chronic energy crisis that cripples industry. The IMF made an initial payment of $540 million, and in November fund officials said during a monitoring visit that Pakistan was “broadly on track” with reforms. In December, Pakistan received $554 million as a second tranche of the loan. In a belated annual report earlier this month, the central bank estimated economic growth for the current fiscal year of up to four percent, surpassing forecasts by international agencies.

“SBP projects GDP growth in the range of 3-4 percent for FY14 which is higher than the IMF s growth forecast of 2.5 to three percent” the bank said. It forecast that the three-year loan deal should bring stability to the domestic foreign exchange market during the current fiscal year. In the last fiscal year, Pakistan’s economy grew at 3.6 percent, the bank said, and inflation fell to single digits. But it warned inflation could rise as high as 11 percent in the current fiscal. Economists say growth needs to be seven percent to absorb the country’s booming population.