Pakistan forced to name central bank chief amid rupee mess
islamabad/karachi — Pakistan named former finance secretary and tax agency chief Tariq Bajwa as central bank governor following a clash between the government and monetary authority this week after the apparent devaluation of the nation’s currency.
Bajwa, 53, will replace the State Bank of Pakistan’s acting governor Riaz Riazuddin, he said in a phone interview on Friday. The nation’s finance ministry confirmed the appointment later in a statement.
“I have been communicated to and I want to join as soon as possible, maybe in a day or two,” said Bajwa, who has held key positions in the administration of Prime Minister Nawaz Sharif and is seen as loyal to Finance Minister Ishaq Dar. “It’s another big task.”
The appointment comes after Dar blamed the 3.1 per cent tumble in the rupee against the dollar on Wednesday, the worst fall in nine years, to a “miscommunication” by individuals and institutions. Dar told reporters on Thursday that the deputy governor of the central bank wasn’t aware of adjustment in the managed currency and said he would appoint a full-time governor as early as possible. The appointment, made amid tensions between the central bank and government, prompted some analysts to question the monetary authority’s independence going forward.
“Since the selection and job of the central bank governor is not being advertised and there is no panel to assess the new governor, in our view, it would be difficult for the governor to work independently,” said Muzzammil Aslam, chief executive officer of EFGHermes Pakistan.
The rupee gained 0.4 per cent to 105.5 at 11am local time. Former governor Ashraf Wathra, who completed his term in April, introduced South Asia’s first independent monetary policy committee and steered interest rates lower in the oil importing nation after crude prices dived.
Bajwa will be taking the helm as South Asia’s second-largest economy faces headwinds, with the current account deficit widening in the past 11 months through May to $10.6 billion, primarily on the back of falling exports. — Bloomberg