Kardar’s departure may delay IMF talks

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As the government is busy sorting out difficulties arising after the sudden departure of the governor of the State Bank of Pakistan (SBP), talks between Pakistan and the International Monetary Fund (IMF) are likely to be delayed for a few days from the proposed date of July 20.
An official source said the tentative dates for the week-long talks with the IMF were July 20 to 27. However, he said the dates might have to be extended for a few days because of the departure of SBP Governor Shahid Kardar. The IMF would be reviewing the performance of the economy, especially from April to June period, on the basis of the actual data of the last fiscal year. As the Fund had already warned the government that the economic data of the last fiscal year should have actual figures, extra caution was adopted in compiling the figures, causing a delay.
The compiled figures were being reassessed before their final approval. The tax collection figures of the Federal Board of Revenue (FBR) were still being reassessed and would require a few more days for approval, the source added. Finance Minister Hafeez Shaikh met with Prime Minister Yousaf Raza Gilani on Saturday.

A source said the issue of the SBP governor’s departure was also discussed. He said the government wanted Kardar to continue until the conclusion of the talks with the IMF, as he had played an important role in keeping the Fund engaged.
After suspension of $11.3 billion standby arrangement facility in May 2010, the IMF mission would be holding a full review of the economy to decide on releasing the next tranche of $ 1.6 billion. The government is striving for the revival of the IMF programme as its suspension had resulted in drying up of foreign inflows from other donors. Keeping the IMF engaged had helped Pakistan retain the confidence of the international community. The source said the government was in a difficult situation as the appointment of a new SBP governor just a few days before the talks would not create a good impression.
He said the presidential camp was looking for appointing someone who could handle government borrowings and other financial slippages during the next few months before the general elections. The source said the chances of the release of the next tranche were bright, as despite the devastating floods and low foreign inflows during the last fiscal year, the fiscal deficit had been maintained at 5.3 percent of the gross domestic product (GDP). The achievement of revenue collection target of Rs 1,588 billion by the FBR during the last fiscal helped curtail the fiscal deficit.
Kardar determined not to return:
Shahid Kardar, who resigned as State Bank of Pakistan (SBP) governor, is determined not to resume his responsibility despite hectic efforts to convince him to withdraw his decision at a time when the IMF team is expected to soon reach Pakistan. A source told Pakistan Today on Saturday that the government had never offered Terms of Reference (ToR) of the contract to Kardar. “So it does not matter whether his formal resignation reaches the Presidency and he resigns or not,” he said. Another source said the reason the government had not offered ToR to Kardar was that a new and reviewed law was in the making. It is understood that he decided to quit because of his differences with the government and his last meeting with President Asif Zardari also did not go well.