IMF economist appointed SBP governor

An Aitchison graduate Dr Baqir received his PhD from the University of California, Berkeley, in Economics and has worked with the IMF for the past approximately sixteen years. He has been the head of the IMF’s Debt Policy Division and worked on IMF policies on external debt sustainability and reorganizing of member countries. He sketched debt and fiscal policies for affected by crisis countries for example Greece and Ukraine. He performed assignments well in IMF and worked dedicatedly at the World Bank, Massachusetts Institute of Technology and Union Bank of Switzerland. Dr Baqir will be the second IMF staff member to head the central bank. In this context Dr Mohammad Yaqub came in from the IMF to head the State Bank from 1993 to 1999. Dr Yaqub the builder of an independent central bank before encountering into difficulties after the freezing of foreign currency accounts subsequent the nuclear detonations in 1998 and following sanctions. He was replaced by Dr Ishrat Husain from the World Bank who served two terms before being replaced by Dr Shamshad Akhtar from the Asian Development Bank. Dr Baqir’s assignment arouses some issues. Whether to resigns from the IMF to take up his new position, or stay as an IMF employee while helping Pakistan as State Bank governor? His forerunners from the international agencies did not return to their former employers after leaving SBP governorship. The auction of government treasury bills is time tabled and at that time the debt markets have on the guidance of interest rates will also become visible.
The appointment of Reza Baqir as Governor State Bank of Pakistan was confirmed by Dr Firdous Ashiq Awan, Special Assistant to the Prime Minister on Information and Broadcasting. He got his education from renowned international educational institutions, like Harvard and Berkeley California. He was not supported by his achievements other than his position as International Monetary Fund’s senior resident representative in Egypt. He had joined the Prime Minister’s finance team to manage the economy out of the present critical crisis. The respect to serve the country is wholly Dr Baqir’s and not the other way round. In this regard, it is appropriate to note that developed countries do not consider those of their nationals serving in international as candidates to head their central banks. Kuroda a past president of ADB was appointed as governor of the Japanese central bank nevertheless he had previously served in many positions in the Japanese Ministry of Finance unlike Baqir, positions that reasoned for his nomination as president ADB. It is apparent to note that no State Bank of Pakistan Governor has ever defied following the IMF specific conditions. Confrontation has always come from the Finance Ministry and it is the influence on SBP decisions that accounts for the IMF’s repeated insistence to grant autonomy to the central bank in form and content.SBP Governor Tariq Bajwa confirmed to that he was asked to resign while he was in Islamabad for talks with the Interna¬≠tional Monetary Fund that are presumably advancing. The course of events came on a day when Prime Minister Imran Khan indicated at additional changes to his cabinet in the days advanced. It was not evident how the change of such senior and important officers will impact the talks with the IMF. However, sources stated that the recently appointed finance adviser concurd with the prime minister’s opinion and appeared to be moving to bring in his own team to handle the country’s finances.
Now under the auspices of the IMF programme gets under way that is after the budget it will shape and guide the conduct of this government almost totally. Reza Baqir was the Fund’s resident representative in Egypt during the years that country implemented a very tough programme, from 2016 onwards. That was a $12 billion Extended Fund Facility that is now drawing to a close as the last of the benchmarks is now being implemented. In most of the cases of Egypt and Pakistan the economic problems facing them are similar. For example, Egypt suffered from an increased fall in foreign exchange reserves subsequently a deep slowdown in the economy after the events of 2011 and the ouster of Hosni Mubarak. GDP was about 2.5 percent per year between 2011 and 2016, unemployment was approximately 13 percent and inflation was about 14 percent. Pakistani economic indicators are so far better today. All these indicators in Pakistan are better today. Gross debt is about 86 percent of GDP, inflation is lower than 9 percent, and the growth rate is nearer to 3 percent. Egypt’s planned external-debt-servicing requirements are still less than what forecast for Pakistan depict so perhaps the future is more severe for ourselves than it is for themselves, but for the right now Pakistan appears to have it a little better. Reza Baqir has vast experience with macroeconomic adjustment. Egypt’s government finances are greatly invested in underwriting consumption than Pakistan’s, where expenditures are largely concentrated on paying the government’s bills and development spending.

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