AMMAN: Jordan’s former central bank governor said on Wednesday he was pushed into resigning after armed police surrounded the bank’s headquarters, in a show of force that economists said threatened the institution’s independence.Faris Sharaf, a respected banker appointed last November who lobbied against a government program of hefty subsidies, resigned last week, shaking a domestic financial sector he was credited with nursing back to health.He told journalists that security forces gathered at the bank in the center of Amman on Sunday, a day after he resisted a phone request from Prime Minister Marouf Al-Bakhit to quit.“When I saw the danger to the institution and the country by such violent behavior, and to protect the institution and the future of the country, I immediately submitted my resignation,” Sharaf said in his first public comments since leaving office.Independent witnesses confirmed to Reuters that security personnel had surrounded the bank, and a security source said gendarmes had taken position around the entrance to ensure Sharaf would be barred from entering.Central Bank and government sources declined to comment on the circumstances of Sharaf’s resignation.
While being spared the widespread civil turmoil that has this year shaken and in some cases toppled regimes across the Middle East and North Africa, Jordan saw weeks of protests when people called for wider political reforms.To head off greater unrest, Jordanian authorities expanded subsidies to the tune of $1.4 billion and channelled tens of millions of dollars to develop provincial and tribal areas that form the backbone of support for the Hashemite royal family regime, offering more handouts to citizens.Sharaf had been critical of the subsidies, which he said were eating up the country’s 6.9 billion dinars ($9.73 billion) budget and risked pushing the public debt beyond $15 billion.
Opposition politicians and bankers said his departure had further damaged the image of a government already under fire for failing to spur growth and restore flagging business confidence as the economy reels.The central bank’s independence was now in question, according to senior figures.“The way he was asked to leave is an encroachment on the central bank’s independence. It would be worrying if it is an attempt to relieve fiscal constraints by ensuring future facilities and loans,” said Jawad Al-Anani, a former deputy prime minister and prominent economist.Businessmen and economists say Sharaf, a technocrat who served as deputy governor and as head of the state pension fund saw growth in its 5 billion ($7 billion) portfolio, played a key role in strengthening bank regulation credited with improving the health of the banking sector.
Jordan’s banks have a healthy capital base with assets of over 36.5 billion dinars ($51.5 billion).Prime Minister Bakhit, drawn from the ranks of the country’s powerful conservative state bureaucracy, was quoted in local papers as saying US-educated Sharaf’s liberal leanings and advocacy of free-market economics ran contrary to the government’s program for expanding social welfare.“Sharaf showed that he was not in tune with the special government orientation of social welfare economics as opposed to free market views he embraced,” Bakhit was quoted as saying.Bakhit favors a bigger state role in the economy and wants to roll back privatization measures that his supporters say have widened social gaps in the country.
Economic growth in Jordan is expected to hover at around 3 percent this year, comparing with an average of 7 percent over the last decade and its slowest rate of expansion since a crisis in 1989, when the aid-dependent kingdom was forced to seek help from the IMF.It is also struggling to trim a deficit that stands at over $1 billion.Bakhit said the central bank governor had no immunity under the constitution and it was the government’s prerogative to appoint and dismiss him.
Sharaf, who said his dismissal was illegal, has been replaced by a long-time veteran of the bank, Mohammad Said Shaheen, a deputy governor who is not expected to change a policy brief whose main plank is the defense of the dinar currency, which is pegged to the dollar.But Sharaf’s ouster is unprecedented for one of the few state institutions that have been spared political meddling in a country where nepotism and favoritism are rife.“The institution that is responsible for monetary policy should be independent of political decisions, whether they are in tune with the government’s policies or not,” he added. – Arabnews