KARACHI - PAKISTAN has appointed the head of the country's business council to lead the central bank as Islamabad battles soaring inflation and stagnating economic growth, officials said.

Saleem Raza, 62, will replace Shamshad Akhtar, the first woman governor of the State Bank of Pakistan who will leave the job on Thursday after a three-year stint, the government announced.

Prime Minister Yousuf Raza Gilani 'expressed confidence that the new governor, who has sound experience in the financial sector and international banking, would work to the best of his abilities towards meeting the enormous economic challenges being faced by the country,' his office said.

When Ms Akhtar, 54, took the job three years ago, Pakistan was listed as one of the world's most promising emerging markets, but political instability has dented investor confidence, and soaring food and oil prices have hurt consumers.

The stock market has lost nearly a third of its value in the past two weeks.

The International Monetary Fund (IMF) in November awarded Pakistan a US$7.6 billion (S$10.9 billion) credit line to help stave off a balance-of-payments crisis in the world's only nuclear-armed Islamic power.

Before the loan was approved, Pakistan's foreign reserves had plummeted 75 per cent in a year to US$3.45 billion.

The rupee had also nosedived by 30 per cent in 2008.

Mr Raza, the current head of the Pakistan Business Council, now faces the tough task of reviving a crumbling economy and implementing the conditions associated with the massive IMF loan.

Ms Akhtar said the 'toughest decision' of her career came in November when the central bank raised its key interest rate to 15 per cent as stipulated by the IMF in order for the loan to go ahead.

Bank spokesman Syed Wasimuddin said Ms Akhtar did not want to continue in the post.

The IMF said last month that Pakistan's economic growth in this fiscal year may shrink to as little as three per cent. That would be the slowest pace since 2000, when the economy expanded only two per cent. -- AFP