Out with the old, in with the new. The government has removed Tariq Bajwa as Governor of the State Bank of Pakistan and replaced him with Dr Reza Baqir, who will now serve as Governor for three years, unless the government is in the mood for another reshuffle.

Dr Baqir looks to be extremely qualified. He is a senior economist who is a summa cum laude graduate of Harvard University and later obtained a PhD in economics at the University of California, Berkeley. He has been an employee of the International Monetary Fund (IMF) for nineteen years and had worked as the Fund’s current Senior Resident Representative for the Arab Republic of Egypt. It cannot be doubted that Dr Baqir would be an expert in monetary policy and is a professional.

Yet that last qualification- of being a strong affiliate of the IMF- could be a double-edged sword and is the factor that is generating controversy with this appointment. As Governor of the State Bank, Dr Baqir plays an instrumental role in the negotiations with the IMF to secure a financial package. The governor is one of the signatories to any programme agreed to by the IMF. It is no secret that Pakistan has not always had the best relationship with the IMF- going for a deal with the IMF always proves to be an unpopular but necessary decision for every government due to the stringent conditions that the Fund attaches with the package. Dr Baqir’s close affiliation with the IMF could be the tool needed to soften IMF and expedite the current negotiations which are reported to be tense and have been going on for too long. However, there is also a risk of a conflict of interest arising about because of Dr Baqir’s IMF past, which could shift the balance to IMF’s favour in any negotiations. The odds could go either way.