| ISLAMABAD, April 29
ISLAMABAD, April 29 The acting head of the State
Bank of Pakistan has been appointed permanent governor, a
spokesman said on Tuesday, a move that analysts say signals that
the bank will continue to be dominated by the finance ministry.
Ashraf Mahmood Wathra has been the acting governor since
January but formally became the permanent governor on Tuesday,
said bank spokesman Khubaib Usmani. He comes from a background
of 35 years in international commercial banking and finance.
His formal appointment comes as Pakistan faces daily power
cuts, inflation and widespread unemployment. The nation of 180
million people must also comply with stringent reforms demanded
by the International Monetary Fund.
The fund saved Pakistan from a possible credit default last
year by giving it a $6.7 billion, three-year loan. In return, it
wants the narrow tax base widened, reforms in the troubled power
sector and the central bank to be more independent.
Wathra is seen as close to Finance Minister Ishaq Dar, said
Farooq Tirmizi, a former business journalist who has done
consulting work for the government.
"This guy has basically pledged that he will do what the
government wants him to on issues that make headlines like the
exchange rate and policy rate," said Tirmizi.
Dar has said publicly that the rupee should trade at 98 to
the dollar after months of volatile fluctuations.
Pakistan received a $1.5 billion gift from the Saudi
government last month, prompting the strongest rally of the
rupee in 30 years. It recovered from 105.40 on March 4 to its
current rate of 98.14.
This month, the government further plumped up its foreign
reserves by raising $2 billion in a Eurobond offering and $1.1
billion from an auction of 3G and 4G telecommunications
Muzammil Aslam, who heads the think tank Emerging Economics
Research, said he believed the central bank would bring down the
policy rate, currently at 10 percent.
"While speaking in Karachi last week at some business forum,
Mr. Mathra had signaled that interest rates will come down,"
The Finance Ministry did not interfere in policy rate or
exchange rate decisions, said a spokeswoman for the ministry.
But Wathra was unlikely to pursue policies that might clash
with the finance minister, said Aslam.
"The status quo will continue, the central bank will be run
on the dictations of Finance Ministry," he said. "I don't think
he will be able to run the central bank independently as
envisaged by the IMF."
In February, during the last meeting with Pakistani
officials, the IMF said that it was broadly pleased with the
government's progress but that it had missed targets for the
central bank's net swap/forward positions and the ceiling on
government borrowing from the central bank.
Authorities had reaffirmed their commitment to adopt
reforms, the IMF said.
(Writing by Katharine Houreld; Editing by Kim Coghill)