Macro Bites

Macro Bite # 94

2 min read

The State Bank of Pakistan is under new leadership, as Governor Reza Baqir’s three-year term came to an end this week. Deputy Governor Murtaza Syed has been elevated to the position of Acting Governor, while rumours persist that Aasim Husain will be appointed as the central bank’s new permanent governor. The trio have served 18, 15 and 32 years at the IMF respectively.

Dr Baqir’s record as governor has attracted both praise and criticism. The SBP’s Temporary Economic Finance Facility disbursed PKR 500 billion in low-interest loans to companies during the pandemic, but some criticised the facility as giving handouts to the country’s wealthiest corporations while the government struggles to implement austerity. Meanwhile, his move to bring in a more market-based exchange rate was praised by some as a sound economic move, while others condemned it for massively weakening the value of the rupee.

At the very least, Dr Baqir’s two decades of experience with the IMF helped Pakistan negotiate yet another round of assistance from the Fund. Whether Pakistan is well-served by continually turning to the IMF however is another question worthy of serious debate.

On the one hand, the economy would undoubtedly be worse off in the short-run if the government could not access IMF loans for import and interest payments. On the other hand, the knowledge that the IMF will always bail them out is a powerful incentive for the elites in power to spend recklessly while undertaking no meaningful reforms whatsoever, knowing full-well that the cost of their mismanagement will ultimately be borne by common people in the form of high commodity prices, cuts to welfare spending, and a depreciating currency.

It’s a vicious cycle, and one that Pakistan currently seems unable to break out of.


KSE-100 fell marginally this week, after a week-long Eid holiday. PKR depreciated this week, as foreign remittances usually slow down post-Eid. Local gold prices also fell this week.

Weekly Data Watch (SPI): No SPI this week on account of Eid

What Else We’re Reading (Local)

  • Monthly inflation has hit its highest level in two and a half years, with no signs of slowing down. (Business Recorder)
  • A new research report found that the food subsidy under the proposed Ehsaas Rashan Programme is unlikely to benefit its target demographic, due to accessibility issues and high transaction costs. (Dawn)

What Else We’re Reading (International)

  • John Lee, a former police officer and security minister who supported the crackdown on pro-democracy protests in Hong Kong, is likely to be appointed as the territory’s new chief-executive. (Bloomberg)
  • Voters in the Philippines will cast ballots for a new president on Monday. The front-runner is Ferdinand Marcos Jr., the son of the country’s late dictator, and his running mate is the outgoing president’s daughter, Sara Duterte-Carpio. (WSJ)

Asad Pabani

Journalist, researcher and documentary filmmaker. Prior works featured in Dawn, Soch Videos and Pioneers Post.

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