We pay for their indifference

Published: February 14, 2012

Pakistan's central bank governor Yaseen Anwar announces the monitory policy in Karachi February 11, 2012. Pakistan's central bank on Saturday announced it would keep its key policy rate unchanged at 12 percent for the next two months in a bid to contain expected inflation in the second half of the 2011-12 fiscal year. PHOTO: MOHAMMAD NOMAN/EXPRESS

The language was a lot milder than that of his predecessor but the message delivered by the State Bank of Pakistan (SBP) Governor, Yaseen Anwar, on February 11, was depressingly familiar: the government has not done nearly enough in terms of structural reforms to manage its budget deficit and, as a result, the rest of the country must suffer in the form of high inflation.

The central bank makes its monetary policy announcements — where it sets the benchmark interest rates for the country — in a publicly televised address, twice a year. These have historically been rather boring pronouncements of government statistics, followed by a decision. This trend was changed by Shahid Kardar (and to some extent even by Syed Salim Raza) who used these opportunities to publicly criticise the government for their failings in fiscal management. When Anwar took over as governor, it was feared that he may be unconfrontational, and indeed his speech was far more diplomatic than that of his predecessor.

But it appears that the SBP has transformed into a different entity altogether, more independent in spirit and unlikely to be cowed — at least in its analysis — by the finance ministry.

Unfortunately for the nation and the economy, the finance ministry seems to be stubborn in its insistence on creating financial plans for the entire country, based on assumptions that could only be described as whimsical. For instance, what makes the government think that Etisalat will pay the $800 million it owes Islamabad this year, when it has not done so at any time since 2006? And this fiscal year’s budget was made after the May 2 incident: what prompted the government to count on US assistance during the upcoming year?

It was disappointing, however, to note how the energy crisis hardly got a mention from the SBP governor. The government’s failure to resolve the crisis is the single biggest reason for both the federal fiscal deficit, as well as the slow rate of economic growth in the country. The governor’s — and the government’s — silence on the matter is deafening.

Published in The Express Tribune, February 14th, 2012.

 

Reader Comments (6)

  • fahim
    Feb 14, 2012 - 2:12AM

    finance and economy of pakistan is a joke. We lie to international donors, we fudge false numbers to show high revenue, we mismanage every plan, we have more than 1 trillion rupee foreign debt, our reserves are all time low (dont believe that 17 billion nonsense as 70% of that are aid form IMF/WB/ADB that needs to be returned with interest), we need to repay 3 billion DOLLARS by MARCH, no international countries will ever put their money here, stock market is driven by speculations and finally the entire financial sector is controlled by chinese and saudi masters. Waiting to see this institute collapse.

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  • Amjad
    Feb 14, 2012 - 4:59AM

    @fahim: Why should it collapse when it is nowhere near as bad as the South European countries such as Greece. If anything Pakistan’s debt is a small joke compared the debt of these European countries. A good plan can reverse everything in hardly a decade.

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  • Ishrat Salim
    Feb 14, 2012 - 1:41PM

    Reply to Amjad…& who is going to wait for a decade..? when there is hardly any sign of optimism for the last 4 years in all the important sectors…you name it…..Recommend

  • Feb 14, 2012 - 2:10PM

    @Amjad: agree to you Pak economy is quite small economy which craving for money right now and anyone who has the will to bring a better change can do it easily …but here economy gets least concerned over politics.. only 3G auction is hope …but doubts of biggest corruption in that too

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  • Yusuf
    Feb 14, 2012 - 5:47PM

    From well planned Local Government system in Pakistan PPP governance choose to take a step back to archaic system of Commissionarate governance. Local Governments create Muni Bonds to finance local infrastructure. Local Government Tax local properties to run the functions locally for the benefit of locals. Creative Financing is altogether mystic to rustic economic planners, finance, and budget planners. PPP delivered to the old system does not make common sense. Is Commissionarate system all about money or just politic? Circular Debt arrangements through creative financing like Infrastructure Bond issue with Tax breaks for common Tax Return Filers. Create a Stake for common Pakistani citizen through Government Retirement Fund, Millons will file Tax Return to get Benefis.
    Create Stakeholder for common Pakistani citizens. This is good time for PPP to deliver to common citizen of Pakistan to make a Stakeholder by giving Benefits back to Tax Return Filers. Pakistan Zindabad.

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  • Feb 18, 2012 - 10:44PM

    @Amjad: With a month-over-month growing trade deficit, depleting Balance of payment reserves, a crashing GDP in REAL terms (negative 10% when measured against gold) , rising debt of 62 Billion Dollars, depreciating Rupee in the forex, I am not sure what gives you hope. Fact of the matter is your country was broke in 2008! Greece is in trouble because it cant hide the facts because its using EURO as its currency. If Pakistan was on the Euro standard, you would have seen the Greek crisis in Pakistan back in 2008. But hang in there, Greece would be like an UPGRADE to Pakistan.

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