Pakistan’s fiscal standing has been at a crucial stand-point ever since the current democratic government came into power. Even though foreign reserves have increased stably, partly due to record remittances, the rupee still fights a depreciating trend and the country faces a huge fiscal deficit, largely on the back of excessive government borrowing.
The government’s domestic debt has jumped by 67 per cent to 5.462 trillion rupees since the PPP government assumed power in early 2008. According to the SBP figures, the country’s total debt and liabilities now stand at a whopping 68.3 per cent of the gross domestic product (GDP). Record government borrowing has left little room for corporate sector credit, causing a hindrance to industrial expansion.
In the midst of all this, we witness the appointment of Yasin Anwar as SBP governor, the fourth office holder under the tenure of the current elected government. Anwar holds 33 years of experience in the banking and finance industry and has worked with major institutions such as Merril Lynch, JP Morgan, etc. and held his last corporate position as an executive vice-president with the Kraken Financial Group. Anwar has served the State Bank as its Deputy Governor since March 2007, and managed all the four clusters of the Central Bank i.e. Banking, Reserve Management, Monetary Policy and Operations. Therefore, he is not expected to take much time to settle into the post, as he was acting governor prior to his final appointment which would cut out the bureaucratic delay.
His experience aside, economists consider the appointment more as a political decision as opposed to one made purely on the basis of merit, considering his personal rapport with the president. While acknowledging his banking experience, many economists consider him short-handed to handle major macro-economic issues. All assumptions aside, Anwar’s main challenge would be to contain the widening current account deficit, ahead of the loan repayments to the IMF in 2011.
Would Yasin Anwar’s appointment bring stability in the economic policy-making of the government? Would he be able to steer SBP as an independent institution or would he be willing to compromise in the face of political pressure to appease the ruling government?
Dawn.com invites its readers to give their views and suggestions.