Pakistan appointed International Monetary Fund economist Reza Baqir as its central bank governor amid sweeping changes across the nation’s key finance and economic posts as the government negotiates for a crucial bailout from the global fund.
Baqir was appointed to run the State Bank of Pakistan for a three-year term shortly after former governor Tariq Bajwa and Federal Board of Revenue Chairman Mohammad Jehanzeb Khan were fired because of their “performance,” according to Firdous Ashiq Awan, a special assistant to Prime Minister Imran Khan. Finance Minister Asad Umar was also asked to resign two weeks ago.
Khan, a former cricket star, appointed Abdul Hafeez Shaikh as his finance adviser two weeks ago amid a cabinet reshuffle. Shaikh is now leading a team that is negotiating the 13th IMF support programme since the 1980s. While the talks with the IMF stalled twice in the past over various disagreements, such as the exchange rate policy, Shaikh said on Friday he wants to develop a “reasonable” IMF plan.
Baqir is taking over the top job at the central bank as inflation is emerging as the new challenge for Pakistan. Consumer prices in March rose to the highest level since 2013, and added 8.82 per cent in April. That is likely to put the most aggressive central bank in Asia on course to tighten monetary policy further, Yousuf Hussain, chief executive officer at Faysal Bank Ltd, said last month.
Pakistan’s credit score was downgraded by S&P Global Ratings in February, which cited a weak economic outlook and the delay in securing an IMF bailout. The rupee weakened 18 per cent in the past year, the worst-performing currency in Asia, while the benchmark KSE-100 Index of stocks lost 15 per cent and closed Friday at the lowest level in almost three years.