In a major development, State Bank of Pakistan (SBP) governor Tariq Bajwa stepped down from his post on Friday. The SBP governor Tariq Bajwa resigned with immediate effect. Hours later, the federal government removed Federal Board of Revenue (FBR) chairman Dr Jahanzeb Khan from his position. The exit of both SBP governor and FBR chief is widely attributed to the worsening economic situation in the country.
"Yes, I'm confirming that Tariq Bajwa is no more holding the office of the governor SBP," Abid Qamar Chief spokesman SBP said in response to a question.
But speculation has been mounting that Tariq Bajwa could resign over government pressure on him after a recent shuffle in federal cabinet. The most important aspect of that shuffle was the removal of finance minister Asad Umar.
Bajwa was appointed governor SBP, during the tenure of PML-N, on retirement of Ashraf Mehmood Wathra, who completed his three-year tenure on April 20, 2017, as governor SBP.
The SBP governor is appointed by the President of Pakistan for a term of three years which is renewable once. Tariq Bajwa was appointed as the Governor SBP by the President of Pakistan on July 7, 2017 for a period of 3 years from the day he assumed the office of the Governor. He has served for some one year and 10 months as governor SBP. This marks a case of serving SBP governor leaving his job almost midway through his three-year term.
Sources said that in the absence of governor, deputy governor Jameel Ahmed may officiate as acting governor SBP until the appointment of a full-fledged governor SBP.
It is learnt that the new FBR Chairman is likely to be from the Customs Group. A formal notification of transfer and posting of Jehanzeb Khan has yet to be issued in this regard. Moreover, the notification of new FBR Chairman is also awaited.
Rueters adds: The removal of the two comes only weeks after Finance Minister Asad Umar was asked to step down amid vital bailout negotiations with the International Monetary Fund, suggesting the government wants to overhaul its financial team amid weakening growth rates and soaring inflation. "The government has decided to remove the governor of the State Bank and the chairman of FBR," a Finance Ministry source said, referring to State Bank of Pakistan governor Tariq Bajwa and Federal Bureau of Revenue Chairman Jahanzeb Khan. A source at the prime minister's office confirmed both had been sacked. Central bank spokesman Abid Qamar told Reuters that Bajwa had "resigned", and that it was unclear who would replace him. Bajwa, appointed governor in 2017 during the tenure of the previous government, was one of the key figures in Pakistan's ongoing bailout negotiations with the IMF.
He was also seen to be close to Ishaq Dar, the former finance minister who appointed him and who championed a "strong rupee" policy that many analysts blame for Pakistan's current economic woes, including ballooning budget and current account deficits.
The IMF is pushing Pakistan to embrace a more flexible rupee policy to end repeated boom-and-bust cycles, with many analysts arguing that the local currency is overvalued.
The government of Imran Khan has also been frustrated by the low tax collection rates during its first year in office, with the disappointing figures threatening Khan's promises to build a welfare state for the poor.
The central bank in March cut its economic growth estimates, forecasting the economy would expand 3.5 to 4 percent in the 12 months to the end of June, well short of a government target of 6.2 percent. The IMF paints a gloomier picture, predicting growth of 2.9 percent in 2019 and 2.8 percent next year.
Pakistan's consumer price inflation in March rose to its highest since November 2013, hitting 9.41 percent year-on-year, before easing to 8.82 percent in April.
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