Gilani accepts Pakistani finance minister’s resignation

ISLAMABAD - Pakistani Prime Minister Yousuf Raza Gilani has accepted the resignation of Finance Minister Shaukat Tareen and forwarded it to President Asif Ali Zardari.

Tareen had tendered his resignation at the beginning of the month but all the efforts of president and prime minister to pacify him could not bear fruit, Online news agency reported.

Rental power projects and good governance related matters led to his resignation, it said, adding Tareen would continue in office till the end of the month.

Pakistan, which faces an electricity deficit of 2,700 MW, had last year approved plans to set up rental power plants to generate 1,500 MW.

Rental power plants are set up to meet short-term and emergency requirements of a country and are typically set up in 4-6 months based on available technology. Rental periods are normally 5-7 years, depending on a country’s needs.

An earlier report had quoted Tareen as saying he was stepping down to focus on his private business interests.

Pakistani stocks fell on the news as well as on confirmation of a 10 percent capital gains tax that will soon be applied to the purchase of shares, dealers said.

Tareen’s resignation is not expected to destabilise the government but international donors will be keen to see a respected minister appointed in his place, Dawn newspaper reported on its website.

“Tareen knows and understands the market well and there’s a bit of uncertainty about who will replace him,” said Sajid Bhanji, a dealer at brokers Arif Habib Ltd.

The Karachi Stock Exchange (KSE) benchmark 100-share index was down 1.22 percent at 9,831.19 at 0916 GMT.

There has been speculation for weeks that Tareen, who negotiated an International Monetary Fund loan in 2008, would resign.

“It is our duty, we should not mix up our official duties and personal business,” Tareen told Dunya Television.

Government officials said Tareen was stepping down to focus on his private banking interests.

In March 2008, a consortium comprising the International Finance Corporation, Bank Muscat, Nomura and Sinthos Capital, led by Tareen and another Pakistani banker, Sadeq Saeed, bought an 86.55 percent stake in Silk Bank for about $213 million.

“He will be leaving soon, maybe as early as this week,” said a government official, who declined to be identified.

“He (Tareen) said he needs to focus on his business and that he can’t do both things at the same time,” he said.

The News newspaper said new investors in Tareen’s bank wanted him to step down and concentrate on the bank.

“New investors in his Silk Bank had set preconditions that they will invest billions in the bank provided a seasoned banker like Tareen pays full-time attention,” the News said.

Another government official said four candidates were in the run to replace him.

One was former central bank governor Ishrat Husain, another was Hafiz Pasha, an economist on a government panel, and a third was Nasim Beg, the chief executive of Arif Habib Investment Ltd.

Minister for Planning and Development Makhdoom Shahabuddin was also in the running for the job, the second government official said.

Tareen was appointed the prime minister’s top adviser on economic affairs in October 2008 and later sworn in as finance minister.

Tareen negotiated an IMF emergency loan package of $7.6 billion in November 2008 to avert a balance of payments crisis and shore up reserves.

The IMF increased the loan to $11.3 billion in July and the central bank received a fourth tranche of $1.2 billion Dec 28.