UPDATE 2-Pakistan’s c.bank governor quits – finance ministry

(Adds reaction, recasts lead)

KARACHI, June 3 (BestGrowthStock) – Pakistan’s central bank
governor stepped down on Thursday citing “personal reasons,”
two days before the announcement of the 2010/11 federal budget,
the Finance Ministry said.

“We don’t know what the reasons are for the resignation,
but the timing of it can be worrisome,” said Sayem Ali, an
economist at Standard Chartered Bank. “It is right before the
budget is announced and relations with the IMF are in a bit of
a difficult stage.”

“There is definitely more than personal reasons to his
resignation,” said a senior government official, requesting
anonymity. “There were a couple of issues, and there was a
tussle going on between him and the government. I cannot
divulge on the issues, but I can say all was not well.”

The announcement was made at 2:41 a.m. Thursday in an
e-mail from the Finance Ministry.

“Salim Raza, Governor, State Bank of Pakistan (SBP)
submitted his resignation from the post of Governor on 6th May
2010, citing personal reasons,” the ministry statement said.

It was not immediately clear why the announcement was
delayed, if he had stepped down nearly a month ago.
Earlier, a source close to Raza said the government had
accepted his resignation. “Yes, I can confirm he has resigned
and his resignation has been accepted, but I cannot comment on
the reasons for his resignation,” the source said.

Raza was appointed central bank governor in December 2008.
Although he had little direct impact on the federal budget,
Pakistan’s financial institutions have been under pressure from
the International Monetary Fund to make painful reforms.

Yaseen Anwar, deputy governor of the State Bank of
Pakistan, has become acting governor, the Finance Ministry

Anwar, appointed deputy governor in March 2007, is a former
executive vice president for London’s Kraken Financial Group.

Stock brokers said Raza’s resignation would have little
impact on the market and they were waiting for who the next
governor would be. Pakistan’s main stock exchange index (.KSE: )
opened 0.35 percent higher at 9,532.31 points.

“The resignation of the SBP governor should have no
material impact on the markets especially since most policies
are coordinated with donor or multilateral agencies, leaving
little room for dynamism by individuals in formulating such
policies,” said Asad Iqbal, chief investment officer at Faysal
Asset Management Ltd.

Pakistan turned to the IMF in November 2008 for an
emergency package to avert a balance of payments crisis and
shore up reserves and received the fifth tranche this month
amounting to $1.13 billion of a $10.66 billion loan.

Stock Research

(Reporting by Sahar Ahmed; Editing by Chris Allbritton and
Bill Tarrant)
(For more Reuters coverage of Afghanistan and Pakistan, see:

UPDATE 2-Pakistan’s c.bank governor quits – finance ministry