By Muhammad Luqman
Pakistan’s Finance Ministry has appointed an IMF economist Dr. Reza Baqir as Governor of the State Bank of Pakistan (SBP) amid ongoing talks with the international lending agency for $8 billion bailout package.
The announcement for the new head of central bank was made late Saturday night , just hours after Tariq Bajwa was removed from the the coveted post. The Chairman of Feberal Board of Revenue (FBR), Dr. Jehanzeb Khan has also been dismissed.
To secure the bailout, the IMF wants Pakistan to broaden its tax base, levy new taxes and raise electricity and gas rates. But any abrupt increase in utility prices can create problems for the government of Prime Minister Imran Khan who had to cobble up the government with the help of other political parties after July elections last year.
The Finance Ministry has appointed Dr Reza Baqir as the governor of the central bank for three years.
Pakistan’s government has also appointed Dr Ahmed Mujtaba Memon, currently an additional secretary in the Finance Division, as the new chairman of the Federal Board of Revenue (FBR) in place of Dr. Jehanzeb Khan.
“The President of Pakistan is pleased to appoint Dr Reza Baqir as Governor State Bank of Pakistan (SBP) for a period of three years from the date he assumes office,” read a notification from the government issued late Saturday night.
A Harvard and Berkeley university alumnus, Dr Reza Baqir has been with the IMF since 2000 and was serving as the Fund’s senior resident representative in Egypt. He has previously served as the head of the IMF Mission for Romania, and as Head of the Fund’s Debt Policy Division. He has also worked with the World Bank, the Massachusetts Institute of Technology (MIT) and the Union Bank of Switzerland.
Both the new head of the SBP and Adviser to the PM on Finance Dr Abdul Hafeez Shaikh are from the Bretton Woods institutions — the World Bank and the IMF. Dr Shaikh has also worked with the World Bank, the English newspaper, Daily Express Tribune reported.
The decision to remove the heads of two important economic policy-making institutions — SBP and the Federal Board of Revenue (FBR) — was taken after Dr Shaikh expressed the desire to bring his own team.
The departures of former governor SBP Tariq Bajwa and FBR chairman Jahanzeb Khan come only weeks after finance minister Asad Umar was asked to step down amid vital bailout negotiations with the IMF, suggesting the government wanted to overhaul its financial team amid weakening growth rates and soaring inflation.
It was learnt that Prime Minister Imran Khan was unhappy with the former SBP governor due to the continuous devaluation of Pakistani Rupee. However, the prime minister does not have the powers to remove the governor of the central bank except in certain circumstances that are defined in the SBP Act of 1956.
Bajwa was holding a statutory position for a period of three years that would have ended on July 6, 2020.
The PML-N government appointed Tariq Bajwa as the SBP governor on July 7, 2017. The SBP Act of 1956 empowers the president of Pakistan to appoint a governor for a term of three years.
” I preferred not to go to court after government’s decision as it could bring bad name to Pakistan,” Bajwa told a TV channel after a notification for his dismissal was made public by the government late Saturday night.
Pakistan’s key opposition political parties have condemned government’s decision to change the economic managers , accuding PTI administration of surrendering to IMF pressure.
” This action may make Pakistan a colony of IMF; We will protest against the dismissals,” Ahsan Iqbal, opposition leader and the former Planning and Development Minister said.
By Muhammad Luqman