THE remarks made by State Bank governor Reza Baqir at a London press conference have hit a raw nerve in Pakistan. In response to a barrage of questions about the rupee’s rapid depreciation and rising inflation in the country, Mr Baqir thought it best to adopt a glass half-full approach; he said that this situation has some sort of silver lining for expats sending money back home. Unfortunately for him, there are few among the 200m people in the country who will take kindly to this viewpoint. The reality of living under skyrocketing costs and shrinking disposable income is harsh and ugly and his remarks against this backdrop were uncalled for. According to him, a weaker rupee results in higher remittances and therefore benefits overseas Pakistanis sending foreign exchange to their families. Moreover, his follow-up remarks, that these rising costs are somehow only a thorn in the side of the “very rich” who “want to buy imported items” are not only far from the truth, they are tone-deaf and insensitive.
Mr Baqir is a seasoned economist with a degree of experience when it comes to monetary policy. But it doesn’t take a genius to know that a dramatic depreciation of currency coupled with inflation can in no way be painted in a positive light. Even by his logic, the “higher volumes” of remittances sent by expats are of no real benefit as inflation eats into any gains. Someone with Mr Baqir’s experience should know better. By making these irresponsible and illogical remarks, the State Bank governor has exposed himself to criticism. His remarks appear to be an appeal to the sentiments of expats whom the ruling party is so eager to woo in the next election. They have also once again raised the question of Mr Baqir, an ex-IMF official, justifying economic policies that have brought misery to the average citizen. In an attempt to paint a rosy picture for expats, it is important that Mr Baqir not forget that there are many millions at home for whom this depreciation has been anything but positive.
Published in Dawn, October 23rd, 2021