Pakistan Fires Central Bank, Tax Body Chiefs Amid IMF Talks

(Bloomberg) -- Pakistan's government removed the governor of the central bank and the head of the tax authority amid the nation's bailout negotiations with the International Monetary Fund.

Tariq Bajwa, chief of the State Bank of Pakistan, and Federal Board of Revenue Chairman Mohammad Jehanzeb Khan were fired because of their “performance,” Firdous Ashiq Awan, a special assistant to Prime Minister Imran Khan said by phone on Saturday. The removal of the two comes weeks after Finance Minister Asad Umar was asked to resign.

Former cricket star Khan faces growing criticism from economists and opposition parties for mishandling the economy and delaying the IMF bailout since coming to power in August in a controversial national election. While Khan has secured loans from friendly nations such as Saudi Arabia, the United Arab Emirates and China to help boost foreign reserves, the economy continued to falter amid balance-of-payments crisis and a depleted treasury.

Khan appointed Abdul Hafeez Shaikh as his finance adviser two weeks ago after forcing the then finance minister Umar to resign in a cabinet reshuffle. Shaikh is now leading a team that is negotiating the 13th IMF support program since the 1980s. While the talks with the IMF stalled twice in the past over various disagreements, such as the exchange rate policy, Shaikh said Friday he wants to develop a “reasonable” IMF plan.

‘Bitter Pills'

It seems Shaikh “wants like-minded people in his team to implement the IMF-led reform process,” Mohammed Sohail, chief executive of Topline Securities Pakistan Ltd., said from Karachi. “You need to take bitter pills like increasing taxes, energy prices and privatization. These things haven't been done yet. They are the toughest ones and need a strong will and bold measures.”

Awan said the Prime Minister will choose from three people proposed by the finance ministry for the governor's position by Monday, while Shaikh will appoint the tax chief. State Bank of Pakistan's Bajwa said he was in Islamabad for talks with the visiting IMF team when he was asked to resign, Dawn newspaper reported.

Pakistan's credit score was downgraded by S&P Global Ratings in February, which cited weak economic outlook and the delay in securing an IMF bailout. The rupee weakened 26 percent in 2018, and the benchmark KSE-100 Index declined for a second straight year to the lowest level in three years.

--With assistance from Faseeh Mangi.

To contact the reporters on this story: Kamran Haider in Islamabad at khaider2@bloomberg.net;Khalid Qayum in Islamabad at kqayum@bloomberg.net

To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net, Ravil Shirodkar, John McCluskey

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