It is said that frequent changes in important key policy financial institutions are disconcerting, but clearly this trend is not unique in Pakistan. Shahid Kardar was the second SBP Governor to resign under the present government. The resignation trend is not exclusive to SBP only as we have seen three changes at the top level in the ministry of finance since the present government took charge. These frequent alterations have caused uneasiness amongst investors and raised questions with regards to consistency in economic policy matters.
Are these frequent changes unique?
Consistent changes in the two most vital financial institutions are no doubt a cause of concern. However, we have seen a similar trend in other countries as well. Ten finance ministers in the last decade have come and gone in a developed economy like Japan.
Six of those changes have come after 2007. Similarly, Thailand saw nine changes in its finance ministry during the last decade. Three of those have come after 2008.
Turkey went through a similar period during the 90’s when eight finance ministers were changed, but the last decade was fairly stable. Argentina leads the way with 13 changes since the year 2000. In comparison, Pakistan has had six changes (in the last decade) out of which four have come after 2008.
In comparison to the finance ministry, central banks have been far more resistant to change. Japan and Thailand have had three and four governors respectively in the last decade.
In comparison, Pakistan has had six central bank governors (since 2000) with four of those changes coming during the last four years, said Furqan Ayub at JS.
Once again, Argentina tops the list with seven central bank presidents serving in the last decade.
Has consistency of economic policy really been affected?
Finance Ministry: The first two finance ministers had a brief stint as democracy returned (after nine years) to Pakistan when political instability was at its peak. However since then, the focus of the finance ministry has been to implement IMF conditions.
Ishaq Dar (Mar 2008 to May 2008)
His tenure will be remembered for the fiery press conference on number fudging which led to panic in the investor community.
Naveed Qamar (May 2008 to Oct 2008)
A make shift arrangement and one budget was presented during his tenor. Naveed Qamar is now the Minister for Water and Power.
Shaukat Tareen (Oct 2008 to Feb 2010)
Pakistan entered the IMF program and some of the IMF reforms were implemented (oil subsidy, taxation, and foreign exchange, etc) in his tenure.
Hafeez Sheikh (Mar 2010 to present)
A tricky period with the IMF program at a standstill and curtailment of foreign aid. He continued the policy of implementing IMF reforms albeit, at a slower pace.
State Bank of Pakistan
Despite the frequent resignations of central bank governors in recent times, the general approach of the SBP has remained constant. It’s been business as usual with focus on stabilizing the economy.
Shamshad Akhtar (Jan 2006 to Jan 2009)
Twin deficit was recorded at 16.3 per cent in FY08 and CPI clocked in at 20.8 per cent in FY09. Rupee depreciated by 27.8 per cent. SBP raised DR by 450bps to 15 per cent.
Syed Salim Raza (Jan 2009 to Jun 2010)
Stability finally started to kick in as inflation started to taper off. CPI was recorded at 11.7 per cent in FY10. DR came down to 12.5 per cent.
Shahid Kardar (Sept 2010 to Jul 2011)
DR increased by 50bps each in two episodes. He warned the government against excessive borrowings from SBP that would result in fiscal mismanagement.
Yasin Anwar (Jul 2011 to present)
Took charge as interim Governor and straight away cut the policy rate by 50bps on grounds of easing off external account imbalances.
