Kardar’s resign jolts banking sector, worries investors;

Business community needs urgent re-assurance;

Govt lacks seriousness to broaden tax net as it gets unlimited credit: FPCCI

Resignation of Governor State Bank of Pakistan Shahid H. Kardar is a very serious development which has added to worries of business community, an official of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said Thursday.

“The development has also sent negative signals to international lending institutions and other donors besides contributing to uncertainty among investors,” said Raza Khan, Chairman Coordination FPCCI while speaking to business community at FPCCI Capital Office.

He said that surrender of Kardar can further delay talks with IMF which were expected in August. The move proves that the SBP was not allowed to work freely so that it can play due role in improvement of the economy.

“The finance ministry continues to dictate directives like financing unproductive expenditure through printing currency which has resulted in sluggish economic growth and criticism on the regulator that has forced three governors of SBP to step down,” he added.

Raza Khan said that forcing commercial banking companies to hold government securities has resulted in negative return to depositors and suffocation of the productive sectors.

He said that development suggests that the former governor was reasonably serious about reforming economy but was not allowed to take up his leadership role while the top government functionaries remained non-serious as far as the economic development is concerned.

Rulers which are too busy in politics to consider steps aimed at economic improvement should take urgent steps to reassure banking and finance industry of the country which has jolted by the development, the FPCCI official demanded.

Government should develop interest in good governance, proper tax effort, right direction, capital formation and economic development and use private sector to accelerate the process of investment and growth.

Raza Khan called for serious efforts on the part of the government and commercial banks to bring country out of low growth and high inflation. “Government will never try seriously to broaden tax net as far as it can get facility of unlimited credit from banks,” he said.

The new governor of SBP should try to mobilise savings, finance private sector and design policies for price stability while keeping monetary policy considerations supreme than needs of the rulers.