Mystery shrouds SBP governor’s resignation

Governor State Bank of Pakistan (SBP) Dr Shahid H. Kardar is reported to have resigned under mysterious circumstances on Wednesday.
“Governor State Bank Shahid Kardar tenders resignation from his post,” claimed a media report from the federal capital on Wednesday afternoon. However, none of the State Bank officials, including the spokesperson, confirmed the report, till the filing of this report, and showed their ignorance towards any such occurrence. “I don’t know,” SBP Chief Spokesman Syed Wasimuddin denied when asked to confirm the reports.
The spokesman said he had received no such information from the concerned official quarters. The details, provided to Pakistan Today by an insider at the central bank make the matter even more mysterious. An insider said the Governor State Bank had left for Islamabad last Monday and since then had not contacted the management at SBP head office here.
“And today we heard of his resignation, the (SBP) management is trying its best to contact the governor but in vain,” the source said. Different versions came to the fore about the top central banker’s reported resignation, a rare development which even Prime Minister Yousuf Raza Gilani was incognizant of, as the visiting premier told a press briefing in Balochistan.
According to sources close to the central bank, the governor had parted ways with the economic managers on issues related primarily to “fiscal management”. Deeply concerned and therefore cautious over the ongoing borrowing spree of the cash-strapped government from the banking system, sources said Kardar was foreseeing the country heading towards an irreversible mess in terms of “fiscal management”.
“He (governor) thought he, at the end of the day, he would have to carry the stain of fiscal mismanagement on his back,” the sources said.
SBP under Kardar had persistently been warning the funds-starved government against its ever increasing budgetary borrowing from the banks that, the regulator fears, is jeopardising macro economic stability and monetary management in the country.
“The impact of the widening fiscal deficit was clearly visible in the sharply rising domestic debt. For effective monetary management, maintaining government borrowings from SBP at end-September 2010 levels will be critical,” the central bank observed in its Third Quarterly Report on the State of Pakistan’s Economy for FY11.
Another source cited “some dispute” over policy matters between the country’s economic managers and the disgruntled governor as a reason for the latter’s reported departure from his office. “(He resigned) due to some dispute on policy matters like policy rate etc,” the source said. Elaborating the source said the resource constrained government wanted some cut in the present 14 percent interest rates to revive industrial activity in the country. Some conspiracy theorists also suspect the oft-referred to foreign hand involved in the unexpected resignation of Kardar.
They claim that in dollar-hungry, and therefore, dependant countries like Pakistan important financial slots, like that of the finance minister and governor state bank, are filled with a prior clearance of the International Monetary Fund (IMF). “The IMF might have asked the (SBP) governor for his resignation to put the present defiant government into hot waters,” viewed one such conspiracy theorist. While mystery is hovering over facts about the departure of Kardar, Yaseen Anwar, his deputy, is said to have rolled up his sleeves for acting as a governor until the government fills the top slot with a new face.
Sources claimed that names of senior bankers like Hussain Lawai, presently working as president and chief executive officer of Summit Bank, might come under consideration for filling the top post at SBP. “Hussain Lawai was a strong candidate but he is over age,” another source told Pakistan Today.