Another governor leaves: Govt tight-lipped over Kardar departure
With a highest score of 89, Shahid Kardar never completed a century in first class cricket and it is becoming increasingly evident that he was only able to complete 306 days of a three-year term as central bank governor, though government officials still refused to confirm or deny his departure.
Nevertheless, sources familiar with the matter say that Kardar’s resignation from his position as governor of the State Bank of Pakistan was accepted on Wednesday, though the presidency, the finance ministry and even the central bank refused to issue an official confirmation.
“I can neither deny nor confirm it,” said Farhatullah Babar, the spokesman for President Asif Ali Zardari. A similar statement was made by Syed Waseemuddin, the spokesperson for the State Bank.
Kardar was the 16th governor of the central bank and assumed charge of the office on September 9, 2010. He resigned after reportedly developing strong policy differences with President Zardari. Kardar, 59, is a charted accountant and has played first class cricket between 1972 and 1974.
He was reportedly very close to Planning Commission Deputy Chairman Nadeemul Haq and Finance Ministry Abdul Hafeez Shaikh. All three are public policy experts with liberal, reformist leanings that encounter stiff resistance within a highly conservative bureaucracy.
Sources close to the technocratic trio say that they often promised each other in private that they would leave government as a group if they felt that they were not having a meaningful impact in the corridors of power. It is unclear how the other two will react to Kardar’s resignation, though one finance ministry official deemed the probability of them resigning “far-fetched”.
Reactions from politicians were a little less understanding. “He was not fit for the job and a person far removed from realistic life,” said a key leader of the ruling Pakistan Peoples Party and close ally of President Zardari.
Kardar’s deputy at the State Bank, Yaseen Anwar, has been tipped as his successor.
Published in The Express Tribune, July 14th, 2011.
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@Anum:
I am glad you have spoken up and taken on someone who does not know very much.
If interest rates are negative in 'real' terms, it punishes savers but it should thrill investors! So how does that explain "chronic under-investment" in Pakistan!?
Investment is not determined by the real cost of capital alone. Investment is driven by "animal spirits". Please go and read the brilliant Joan Robinson if you know who that is.
Mr Kardar was a self-made economist (being a CA by profession) although he did read economics in his PPE degree from Oxford. He can stand up to any international banker/economist. His contributions in terms of articles/papers/reports are well known. Just go and Google it.
No one, not even Mr Kardar, can bring inflation down as quickly as we all wish. This is because it can take up to 15 months for policy action to make itself felt in terms of outcomes. This is called LAGS in the transmission mechanism, something which the gentleman also does not understand.
Finally, fighting inflation when there has been another surge in world prices of food and oil (remniscient of 2008) presents the State Bank with an almost impossible task. However, the SBP is not alone as many countries face the same challenge and have moved into a monetary policy tightening mode. Unless these high prices recede quickly and given the lags mentioned above as well as the recklessness on the fiscal side, I don't personally think inflation can be brought down into single digits before another 30 months or longer.
@ Mavrerick
If you had done a bit more research rather than throw rhetoric in all directions, you would have read that inflation, during the governorship of Kardar, actually declined from 15.5 per cent in December 2010 to 13.2 per cent in May 2011 along with the printing of currency notes. Please be more circumspect in your comments. Inflation cannot end with the wave of a magic wand, as much as we all would want- the constant borrowing of the government from the private sector has been fuelling it constantly since the past few years. I seriously doubt that a man of his calibre would need any addition to his 'CV'. As for your recommendation about an international banker, I would actually say that the contrary would be true- the country needs someone who has worked inside it to know exactly who and what he is dealing with.
Kardar was a thorough disappointment; he raised interest rates only once during his tenure and then sat on his hands and did nothing while inflation continued to rage in the country. To make matters worse, he kept printing money as if there was no tomorrow- only fuelling inflation further. Given that unofficially, inflation is running in excess of 20%, real interest are negative in Pakistan; small wonder, therefore, that we have one of the lowest savings rates in the world and the economy suffers from chronic under-investment with an over-reliance on foreign aid.
The position of SBP Governor requires an experienced individual who is either an international banker or an international economist, Kardar was unfortunately neither. His position was further effectively compromised from day one, when he was recommended for the job by his brother-in-law Defence Minister Ahmed Mukhtar. Political expediency then became the overriding consideration and all economic theories apparently went out the window.
His tenure as Governor mirrors his first class cricketing career: short and unimpressive. Doubtless though, like many others, he will have bolstered his CV in the process so that he can return to private life as a consultant, better placed to win more contracts from The World Bank, USAID etc
He is just abandoning the money printing press running on a sinking ship.
May Allah give us God-fearing, loyal, honest and capable leaders and politicians, Ameen.
Governor took the right decision but little late......... He has sacrificed the autonomy of Central Bank before standing against the indiscipline onfront of fiscal issues
Sincere and loyal Pakistanis can't afford to work with Govt...rather, now they can't afford to work in Pakistan itself.
Govt + Private companies are equipped with Politics and Personal Grudges against each others....So loyal people can not work in such environment...if they works...they simply suffers. :(
i think Mr.kardar is really a sincere and loyal person to Pakistan, thats y he quit his poste. A country lover can never work with the present Govt.
Every person of sane mind cannot work with the current government.