Govt will not do anything to undermine SBP's independence: Miftah Ismail

Finance Minister Miftah Ismail said on Wednesday that the government will not take any action that may impact the State Bank of Pakistan's (SBP) independence.

Talking to reporters in Karachi, the minister said that the government is focused on reviving the country's economy.

"The previous government destroyed the economy," he said. "We are going to fix it and everyone will see the difference in the coming months."

He said the previous government did not tell the people about the agreements it made with the International Monetary Fund (IMF).

"They had vowed to eliminate the loss of Rs30 in petrol prices, place a levy of Rs30 and a sales tax of 17pc, increasing [the price] by approximately Rs90. This is something PM Shehbaz Sharif has resisted and will continue to do so."

The minister also said that the government had decided against granting Dr Reza Baqir an extension following the completion of his three-year term as governor of SBP.

"He has served Pakistan and we wish him the best of luck," he said, adding "the senior-most deputy governor becomes the acting governor now."

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Earlier, in a tweet, Ismail wished Dr Baqir the very best, and said "we worked well during our brief time together".

"Tomorrow, SBP Governor Dr Reza Baqir’s 3-year expires," said Ismail. "I have spoken to him and told him of the government’s decision. I want to thank Reza for his service to Pakistan. He is an exceptionally qualified man and we worked well during our brief time together. I wish him the very best."

The change in SBP leadership comes at a time when Pakistan remains in talks with the International Monetary Fund (IMF) for the revival of its stalled Extended Fund Facility (EFF). Just last month, Ismail and Dr Baqir along with other economic managers undertook a trip to Washington to move ahead on the IMF programme. Ismail had stated then that Pakistan has sought an increase in the size and duration of its $6 billion EFF.

Dr Reza Baqir's tenure as SBP governor ends, Miftah wishes him 'the very best'

Dr Baqir was appointed as governor of the SBP by the President on May 4, 2019, for a period of 3 years from the day he assumed office, which he did on May 5, 2019. His term, therefore, expired on Wednesday (today). He had replaced Tariq Bajwa who resigned from the top slot of the SBP in 2019.

Earlier, Business Recorder had reported that Dr Murtaza Syed will assume the charge of acting governor if the federal government did not grant an extension to Dr Baqir. Sources had said that the present coalition government is not willing to re-appoint him after the expiry of his three-year tenure. Two weeks earlier, a federal minister also hinted at the possibility.

Last month, an official of the government had said that the appointment of a retired bureaucrat as governor of SBP was unlikely due to age restrictions in the law. According to the SBP Act 2021, no person shall hold the office of the Governor or Deputy Governor after attaining the age of sixty-five years. He added the names of some bureaucrats, being cited in the media as possible candidates for the position, had retired a few years back and they are; therefore, ineligible for the office of Governor SBP age-wise.

During Dr Baqir's tenure, the SBP took a number of measures to strengthen Pakistan’s financial sector including an aggressive economic support package of over Rs 1.5 trillion in response to COVID-19. Roshan Digital Accounts, an initiative aimed at digitally including the diaspora into Pakistan’s banking system and providing incentives to use formal channels to remit, as well as the implementation of the National Payments Strategy to promote the digitization of financial services, were also launched during his tenure. Mera Pakistan Mera Ghar (MPMG), another initiative that set lending targets to banks for the provision of financing for the housing and construction sector, was also launched.