Shaukat Tarin

Karachi, Feb. 23 (Reuters): Pakistani finance minister Shaukat Tarin said today that he was stepping down to focus on his private business interests.

Tarin’s resignation is not expected to destabilise the government but international donors will be keen to see a respected minister appointed in his place. Pakistani stocks fell on the news as well as on confirmation of a 10 per cent capital gains tax that will soon be applied to the purchase of shares, dealers said.

“Tarin 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.

There has been speculation for weeks that Tarin, who negotiated an IMF loan in 2008, would resign. “It is our duty, we should not mix up our official duties and personal business,” Tarin told Dunya Television.

Earlier, government officials said Tarin 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 Tarin and another Pakistani banker, Sadeq Saeed, bought an 86.55 per cent 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 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 Tarin’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 Tarin 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.

But an official with knowledge of developments said former State Bank of Pakistan governor Husain had declined the offer.