Pakistan has made an IMF economist the head of its central bank as it negotiates a bailout with the fund


  • A day after removing the governor of Pakistan’s central bank, Tariq Bajwa, , the country’s PM, Imran Khan, has appointed his replacement: Reza Baqir, an economist with the International Monetary Fund.
  • Baqir’s appointment has come under criticism for its timing. Pakistan is in the final stages of negotiating a bailout to the tune of $6-$8 billion with the IMF -- its 13th such loan programme to date.
  • The IMF loan will likely require the imposition of hard austerity measures such as welfare spending cuts, another currency devaluation and higher taxes - and Pakistan needs to prove that it can go through with it.

A day after removing the governor of Pakistan’s central bank, Tariq Bajwa, supposedly owing to “his performance”, the country’s government, led by Imran Khan, has appointed his replacement: Reza Baqir, an economist with the International Monetary Fund.

A government official told the FT that Baqir would be “up and running very quickly. He won’t need to go through a learning curve.”

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The move has precedence. A few weeks ago, Khan removed his finance minister Asad Umar and made Abdul Hafeez Shaikh, a former World Bank official, his special advisor on finance.

Baqir’s appointment has come under criticism for its timing. Speaking to Dawn, Raza Rabbani, a member of Pakistan’s opposition, likened it to "colonisation of Pakistan by international financial imperialists".

With its foreign exchange reserves depleting, the cash-strapped and heavily indebted Pakistan is in the final stages of negotiating a bailout to the tune of $6-$8 billion with the IMF -- its 13th such loan programme to date.

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In fact, as talks have moved to the technical stage, a delegation of IMF officials have been in Pakistan since last week to reportedly finetune key parts of the package.

However, the package hinges on the examination of the debt the country has taken on from China related to the $60 billion China-Pakistan Economic Partnership (CPEC). Which is why talks have been tense.

Hence, Baqir’s appointment is likely a show of good faith as it attempts to secure the bailout.

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The IMF loan will likely require the imposition of hard austerity measures such as welfare spending cuts, another currency devaluation and higher taxes - and Pakistan needs to prove that it can go through with it. Bajwa was reportedly not on board with some conditions like a free float of the currency.

The US has cautioned against the IMF bailout, saying that it should not be used to refinance Chinese projects or for Pakistan to pay back its loans to China.

Pakistan has been negotiating the IMF package ever since the new government came to power in August 2018. During the last nine months, the country’s external financing shortfall has been tied over with generous loans from China, Saudi Arabia and the UAE.

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Pakistan’s last IMF programme was in 2013 - 2016, when it secured a loan of $4.2 billion. This was the country’s first successful completion of an IMF programme.


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Pakistan's bailout from the IMF hinges on an examination of its Chinese debt
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