Pakistani governor steps down as term expires

Reza Baqir has stepped down as governor of the State Bank of Pakistan (SBP), after the government declined to renew his three-year term.

The government has not yet appointed a permanent replacement. Finance minister Miftah Ismail said in a tweet that, by law, the most senior deputy governor will stand in as governor.

“Therefore Dr Murtaza Syed, an eminently qualified economist with rich IMF experience, will take over as governor SBP,” Ismail said. “I wish him the best in his new role.”

Like Baqir, Syed is a former economist with the International Monetary Fund, where he served for 16 years before joining the central bank, most recently as an adviser in the IMF’s Institute for Capacity Development. He was appointed deputy governor in January 2020.

Baqir was with the IMF for 18 years, and at the World Bank for two more, before he was appointed SBP governor in May 2019. He previously headed up the IMF office in Egypt and served as deputy chief of the fund’s emerging markets division.

Baqir said in a tweet on May 3 that he was grateful for the chance to serve as governor. He said he was proud of the many initiatives the central bank had launched during his tenure, including a Covid response package, the Raast instant payment system and various financial inclusion campaigns.

“We face several challenges but also have great strengths as a country to address them,” Baqir said. “I am confident and hopeful that we as a country will make the right choices.”

Interim governor Syed takes the helm at a difficult moment for Pakistan. A vote of no confidence ousted prime minister Imran Khan in April and the political turbulence triggered a drop in the rupee, adding to a resurgence of long-running balance of payments troubles.

Although the economy is expected to growing this year, inflation was running at over 13% in April. The State Bank of Pakistan made an emergency 250 basis point rate hike at an unscheduled meeting on April 7.

The country’s recovery from the pandemic has fuelled a surge in import demand, which led the current account balance to swing from surplus to deficit. Foreign exchange reserves fell from $24 billion at the start 2022 to $17.4 billion in March.

The country is partway through an IMF programme but talks on the next round of funding have been held up by government subsidies that the IMF views as incompatible with the agreed reform process. Talks are due to resume in May.