Did Raza quit due to heavy govt borrowing?

KARACHI: Former State Bank governor Salim Raza, who resigned on Wednesday, was said to be unhappy with heavy government borrowing from the central bank which an official said was the main reason for his quitting the job.

The resignation of the SBP governor has sparked rumours as he left at a time when the government is preparing to present the federal budget for 2010-11. According to officials, Raza had pointed out at various levels that heavy government borrowing from banks was causing problems for the economy.

SBP spokesman Syed Wasimuddin said the government never extends the SBP governor’s age limit. In case of Raza, age limit was not the issue as he had eight months left in his tenure. Besides, he said, “government borrowing cannot be a reason for his resignation,” he added.

Media reports said Raza was going to reach the age limit next year and that the government was unwilling to give him extension. According to the law, age limit of the SBP governor is 65 years.

Officials said the age limit could not trigger Raza’s resignation because it was clear right before his appointment.

“Raza did not seek any extension of his tenure which was due to expire on 15th February, 2011,” the SBP said in a press release on Thursday.

“Raza has resigned due to personal reasons,” the SBP spokesman added. He was commenting on press reports quoting sources as saying that the governor resigned because he was not given extension.

Raza, who took over as SBP governor on January 2, 2009, was due to retire on February 15, 2011 on attaining the age of 65 years.

Relevant provision of the State Bank of Pakistan Act 1956 says that no person shall hold the office of the governor after attaining the age of 65 years. Therefore, the question of his seeking extension does not arise, the spokesman added.

In a separate announcement on Thursday, the SBP said its Deputy Governor Yaseen Anwar has taken over charge as acting governor of the central bank. Anwar assumed his new responsibility following the acceptance of the resignation of Salim Raza by President Zardari on Wednesday.

Anwar, who has been serving the State Bank as its deputy governor since March 29, 2007, has held responsibilities of managing all the four clusters of the central bank.

As a senior global banker, Anwar brought 33 years of international banking experience to the SBP. Prior to joining the SBP, he was associated with Kraken Financial Group, London as its Executive Vice President since 2003.

Anwar, with deep corporate business relationships in the US, Europe and the Middle East, developed a broad range of hands-on experience in managing rapidly growing business units of renowned global financial institutions with detailed knowledge and oversight of regulatory environment, capital markets, operations, payments, export finance, investment management and credit-related matters.

Published in the Express Tribune, June 4^th, 2010.