IMF’s Reza Baqir appointed as new SBP governor

Ahmad Mujtaba Memon will be new FBR chairman

ISLAMABAD: President Arif Alvi on Saturday appointed for three years Dr Reza Baqir – a serving official of the International Monetary Fund (IMF) – as new governor of the State Bank of Pakistan (SBP).

The government also decided to appoint Ahmad Mujtaba Memon as new chairman of the Federal Board of Revenue (FBR), although no notification was issued in this regard till the filing of the story.

With appointment of Reza Baqir, the country’s top two most important economic positions have been occupied by people who have worked at the Bretton Wood System institutions – the World Bank and the IMF.

According to some analysts, the fresh appointments have taken away the control of Pakistan’s economy from the civilian goverment.  Dr Baqir confirmed to The Express Tribune that he has resigned from the IMF. Baqir also said he did not have any other nationality.

Earlier, Prime Minister Imran Khan had appointed Dr Abdul Hafeez Shaikh as his adviser on finance – effectively the de facto finance minister. Both the finance minister and the SBP governor co-sign the Letter of Intent that a country sends to the IMF managing director for requesting a bailout package.

“In pursuance of section 10 (3) of the State Bank of Pakistan Act, 1956, the President of Pakistan is pleased to appoint Dr Reza Baqir as Governor SBP for a period of three years from the date he assumes office,” said a Finance Ministry notification.

It said the terms and conditions of the appointment will be notified later with the approval of the President of Pakistan. The PM decided to remove the SBP governor Tariq Bajwa in the midst of ongoing talks with the IMF and brought in a person to negotiate the deal who has drawn his last salary from the IMF.

While in opposition, Imran Khan was against taking loans from the IMF but in the last few months he not only twice requested the IMF’s MD to approve the loan package but has now also hired their man to oversee the programme on behalf of the government of the Pakistan Tahreek-e-Insaf (PTI).

In order to immediately vacate the position for Reza Baqir, the prime minister took the federal cabinet’s nod for accepting resignation of Tariq Bajwa through circulation of a summary. He did not wait for regular Tuesday’s meeting.

“In pursuance of the federal cabinet decision dated May 4, 2019, the federal government has accepted the resignation tendered by Tariq Bajwa Governor State Bank of Pakistan on May 3, 2019, with immediate effect,” said another notification of the Finance Ministry. Consequently, the office of the SBP governor has become vacant, it read.

Sources told The Express Tribune that Reza Baqir was residing in the Guest House of the PM’s House, which is also temporary residence of the de facto finance minister Dr Abdul Hafeez Shaikh.

Baqir is currently serving in the IMF as senior resident representative to Egypt. There have been admirers and critics of the IMF’s policies implemented in Egypt.

Some say these have brought hyperinflation, slowed down the economic growth rate and increased unemployment. Others argue that the IMF policies brought stability in Egypt’s economy.

Baqir’s immediate responsibilities will be to roll out policies set out by the IMF including implementing a flexible exchange rate regime, reducing the government’s reliance on central bank borrowings and ensuring transparency in many loans transactions.

He has remained a frequent visitor of PM’s Office and Bani Gala and was present in meetings in which Jehanghir Tareen and his likeminded people convinced PM Khan that former finance minister Asad Umar was of no good to the economy and the government.

Sources said the government has also decided to appoint Ahmad Mujtaba Memon as new chairman of FBR. Memon is a grade-21 officer and is currently serving in the Ministry of Finance as additional secretary. Memon, an officer of the Customs Group, is considered very close to Dr Hafeez Shaikh.

Memon is a dual national who also holds Canadian nationality. He is from the 15th Common. His immediate challenge will be presentation of new budget in line with the IMF’s policies.

He will have to win trust of the FBR senior team in which half a dozen officials are of BPS-22. He will be faced with the challenge to improve tax collection that has nosedived in past nine months.