After all efforts to resolve outstanding differences proved futile, the government has decided to accept the resignation of Governor State Bank of Pakistan, Shahid Kardar. He is the third SBP governor to leave office under the current administration and the second to resign prematurely. Institutional politics, differences with the government over borrowings at high commercial interest rates from a select group of banks, and large allocations to the highly political Benazir Income Support Fund are some of the reasons that seem to have pushed Kardar out. But all the grandiose causes aside, it seems Kardar has paid for not compromising on principles. What his detractors are calling a “stubborn attitude” is Kardar’s unwillingness to compromise on the autonomy of the State Bank. In his short tenure as the SBP governor, he was known for his open opposition to what he considered poor fiscal management on the government’s part, especially its failure to contain a widening deficit, which was six percent of gross domestic product in the fiscal year ending June 30. The bimonthly monetary policy announcements from the central bank under Kardar’s tenure always contained scathing criticisms of the finance ministry’s mismanagement of the economy.
Like his predecessor Salim Raza, Kardar too had difficulty persuading members of the federal cabinet to tame state-owned enterprises and implement economic reforms, including expanding the tax net, as per promises made to the International Monetary Fund. The timing of the resignation of a professional and competent economist such as Kardar could not have been worse – the government is about to enter into negotiations with the IMF later this month for the restoration of the $11.3 billion bailout programme. It is almost certain that his resignation will now pave the way for the appointment of a “loyal” head of the central bank; someone more willing to support ill-thought policies initiated by the government.
Copyright TheNews 16.7.2011
Like his predecessor Salim Raza, Kardar too had difficulty persuading members of the federal cabinet to tame state-owned enterprises and implement economic reforms, including expanding the tax net, as per promises made to the International Monetary Fund. The timing of the resignation of a professional and competent economist such as Kardar could not have been worse – the government is about to enter into negotiations with the IMF later this month for the restoration of the $11.3 billion bailout programme. It is almost certain that his resignation will now pave the way for the appointment of a “loyal” head of the central bank; someone more willing to support ill-thought policies initiated by the government.
Copyright TheNews 16.7.2011
