Like a candle in the wind


Having largely been successful in mitigating the effects of exogenous shocks and contagion risks of the international sub-prime crisis, Pakistan is still facing challenges of its own. This was stated by Governor State Bank Yaseen Anwar while addressing the annual Chartered Financial Analyst (CFA) Convention and Excellence Awards ceremony here.
Terming the current events unfolding in the international economic environment as challenging and unique, the SBP governor said conservative and prudent policies should enable the country to remain resilient from exogenous shocks of the global crisis. Anwar said though substantial progress was made to limit the effects of the financial crisis, the vulnerability still persisted in the shape and size not imagined earlier. “One key lesson policymakers and regulators learned from the recent sub-prime crisis is that among many other factors, weak corporate governance practices in leading financial institutions played a crucial role in creating the asset price bubble and misallocation of financial resources,” he said. As a result, the governor said, policymakers in the post-crisis period were placing more emphasis on improving market transparency and Corporate Disclosure.
Few would have thought that the effects of the sub-prime crisis would question the survival of the Euro currency and would threaten the entire European region to fall into a severe recession, he said. Anwar said the World Bank’s country review of Pakistan based on OECD Principles on Corporate Governance rated Pakistan above average on most of the principles. The World Bank in a survey also rated Pakistan as the leader on the robustness of corporate governance standards and practices in South Asia, he added.
Anwar urged the need for: Apart from an enabling environment, proper infrastructure, skills and knowledge, Anwar said, a responsible and ethical behavior of the participants was a pre-requisite for efficient and well functioning markets. “Domestically it behooves us to upgrade our corporate governance practices at all institutions to strengthen our pace of economic recovery and make the environment more challenging and productive for corporate and private institutions,” the governor said.