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Reza Baqir thinks Pakistan is inching towards default, calls for close liaison with IFIs

Reza Baqir thinks Pakistan is inching towards default, calls for close liaison with IFIs


Comments comes as reports emerge that the country has 'activated Plan-B'

LONDON (Web Desk) – Reza Baqir – a former governor of Pakistan’s central bank – said he was more concerned ever about the default possibility and called for a constructive relationship with the international financial institutions on which country relied upon for help.

About the critical statements issued by the government, he told a session at Pakis¬tan Literature Festival that his concerns were related to the fact that Pakistan’s relationship with the international financial institutions (IFIs) had not improved during the past months.

Read more: UN steps up criticism of IMF and World Bank for benefitting rich nations

Describing the possible default scenario for Pakistan as a painful and protracted process, Baqir – who has had a long association with the IMF (International Monetary Fund) – said the country went through the COVID crisis, which he described as much worse situation, successfully when he was managing the affairs at the State Bank of Pakistan and the same could be repeated in the current situation.

Read more: Pakistan activating 'Plan-B' as stalemate with IMF talks persists

The latest prediction about default comes as Finance Minister Ishaq Dar is ruling out the very possibility albeit citing the attempts being made to ensure that geopolitics while urging those making these claims to stop frightening the people.

Read more: Exchange of fire: Miftah says budget isn't sustainable, Dar ridicules default mongers

He also says that the government has a Plan-B in case there is no breakthrough in the ongoing talks with the IMF.

Baqir was the SBP governor at the time when the then PTI-led government surrendered before the IMF and made the central bank a completely autonomous institution – a move which, Dar says, has created a state within the state.

Dar says this because the SBP currently enjoys unchecked powers including managing the exchange rate and deciding about the interest rate – formally known as the policy rate.