The government has finalised a panel for the appointment of new deputy governor of the central bank and also notified a new senior adviser to the International Monetary Fund (IMF), as the vacation of both positions in the past few months was proving costly for Pakistan.
The government notified Saifullah Dogar as senior adviser to the executive director of the IMF after the global lender endorsed Pakistan’s nomination. Dogar is currently serving as a joint secretary in the external finance wing and is dealing with IMF affairs.
The position of the senior adviser had been vacant for over three months after Dr Saeed Ahmad completed his term. Ahmad is likely to be appointed as the new deputy governor of the State Bank of Pakistan (SBP), as his name tops a three-candidate panel for the post.
According to sources, the finance ministry on Tuesday dispatched a summary to the Cabinet Division for placement before the cabinet for its decision. The other two candidates are Ashraf Khan and Qasim Nawaz, who are currently serving in the central bank.
Dogar was interviewed by the IMF a few days ago and after that his three-year appointment notification was issued by Pakistan. He will take charge of his responsibilities later next month. A finance ministry official confirmed the new appointment at the IMF.
The appointment of the senior adviser is being made at a time when Pakistan’s relations with the IMF are seemingly strained. After meeting many harsh conditions like increasing electricity, gas and fuel prices, and jacking up interest rate, the government suddenly made an irrational move by announcing a petrol subsidy of Rs50 per litre. IMF’s Resident Representative Esther Perez told The Express Tribune that Pakistan did not consult it in advance before announcing the subsidy and the IMF had sought details, which included “protections against fraud and abuse”.
Sources said that the government’s subsidy decision had further increased difficulties for the finance ministry, which was already struggling to convince the IMF to announce a staff-level agreement.
Dogar will not only have to deal with these difficulties brought about by the derailed programme, but will also have to lay the groundwork for a new IMF programme.
Pakistan’s continued erratic and fiscally irresponsible decisions have created a wide gulf between Islamabad and the IMF staff, management and executive board. Nobody is ready to trust Pakistan anymore, according to Washington-based sources.
Some informal pressure groups were also working to further widen the trust deficit. Dogar has to work hard to bridge this gulf through background contacts.
Dealing with Pak-IMF relations is a small but important part of the senior adviser’s job. The senior adviser also assists the IMF executive director, who represents eight countries on the IMF executive board.
In addition to this, the senior adviser is also required to assist the executive director in dealing with financing requests from member countries, submit Article-IV reports of members and handle policy papers.
Sources said that under such circumstances, Pakistan needed its representative in the IMF to convince its board members about the dire need for a bailout programme and mend its relationship with the lender.
Finance ministry sources said that a summary had been moved for the consideration of federal cabinet for the appointment of third deputy governor of the SBP. The post has been vacant since January 26 in violation of the SBP Act that demands filling such posts within one month.
Finance ministry sources said that Dr Saeed Ahmad was the favourite candidate due to his experience in monetary policy. The central bank faces issues of lack of human resources on the monetary policy side after its experienced people either left the bank or went on leave.
The summary has been moved two weeks before a scheduled meeting of the Monetary Policy Committee that is again set to increase the interest rate in the range of 2% to 3%.
Earlier this month, the central bank increased the rate by 3% but it was below expectations of the IMF, which wanted a major hike to contain a 50-year high inflation.
Dr Saeed Ahmed and Ashraf Khan had also been considered for the post of SBP governor last year.
The amended SBP Act states that deputy governors shall be appointed by the federal government after consultation between the minister of finance and the governor, from amongst a panel of three candidates recommended by the governor for each vacant position, in order of merit.
In the order of merit, Ahmed is on top of the panel. He has experience in monetary policy, economics and central banking with 35 years of management practice, and substantive experience in international finance and development, monetary policy formulation, financial inclusion, and development finance policy.
He is a PhD in Economics from the University of Cambridge and did MSc in Economics from the University of Warwick, the UK.
Published in The Express Tribune, March 23rd, 2023.
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