Ashraf Mahmood Wathra’s legacy
The Governor State Bank of Pakistan (SBP), Mr. Ashraf Mahmood Wathra has received the ‘Best Central Bank Governor Award’ by Euromoney. Concurrent, with the accolades bestowed upon SBP Governor, a private publication, Emerging Markets, has declared Mr. Ishaq Dar as the ‘Finance Minister of the Year 2016 for South Asia’. These are being put forth as ‘Big’ achievements for a country that has been struggling with multiple social, economic, and financial problems. In the past former banker Mr. Syed Ali Raza and former Finance Minister Mr. Shaukat Aziz also won similar awards during their tenures.
Emerging Markets is a United Kingdom based publication and is a subsidiary of Euromoney Trading Limited/Euromoney Institutional Investor PLC. The Euromoney is a similar type of private publication.
As always certain segments of the media and the detractors have immediately stepped forward to belittle these accolades. It has even been said that some of the large state-owned financial institutions have paid funds to arrange the award for the Finance Minister. According to one prominent journalist, the ‘magazine’, which declared Mr. Ishaq Dar the Best Finance Minister, has been known to name any individual with a ‘high’ title for USD10,000-20,000.
Achievements Extolled:
Besides extolling the significant role played by Mr. Wathra for financial inclusion in Pakistan, the magazine in its press release also acknowledged his role in bringing stability to Pakistan’s currency; successfully completing an IMF program; helping to improve the country’s economy from a period of stabilisation to an era of potential growth; bringing significant changes to governance; reducing direct government financing from the central bank; boosting the country’s capital markets; and bringing confidence about Pakistan’s future both domestically and internationally.
Similarly, in support for Mr. Dar, Toby Fildes, the Managing Editor of Emerging Markets, stated: “While we recognise it has been difficult times in the international financial markets, your stewardship of your nation’s finances has been admirable since taking over….. Pakistan has, under your guidance, become an increasingly important regional economy thanks to the focus put on growing FDI (foreign direct investment), the impressive reputation of economic competence, the desire to have a greater presence in the global capital markets, the new securities legislation, the clever merger of the stock exchanges and its increasingly important relationship with China”.
Earlier IMF’s Mission Chief to Pakistan, Harald Finger, expressed hope that Pakistan’s economy would move towards a new and sustainable course, breaking from the past cycles of near-crises and aborted stabilisation programmes. “With stronger buffers, improved sentiment, gradually recovering growth, and prospects of more energy supply and an additional impetus from the China-Pakistan Economic Corridor (CPEC), there was hope that Pakistan’s economy would set on a new and sustainable course,”
Reality Check:
- The Stock Market of the country continues to touch new highs.
- The Foreign Exchange Reserves appear robust, albeit bolstered by the incessant borrowing by the government.
- Pakistan has been ranked as a country with “serious” hunger level, with 22% of its population undernourished on the 2016 Global Hunger Index. Placed 107th in a ranking of 118 developing countries.
- Pakistan is ranked third in the world with the greatest number of children under five years age, suffering from stunted growth With a population of 9.8 Million stunted children, as per a report titled ‘Caught Short: How a Lack of Toilets and Clean Water Contributes to Malnutrition’ published by WaterAid. According to the report, 45% of Pakistani children are stunted, nearly 9% of the population does not have access to clean water and 39% do not have access to decent sanitation. As per percentage of stunted children, Pakistan is ranked eighth in the ten worst places in the world.
- Exports in Pakistan continue to decline, imports are rising, the balance of payments is worsening, debt – external and internal – has reached alarming levels, Debt to GDP continues to rise, remittances are coming under increasing strain, tax collection continues to remain sub-par, and the government continues to grapple with circular debt for electricity, with speculation that a similar liability is developing in the gas sector.
- CPEC, a game changer for not just Pakistan, but the region is progressing with signs of some slowdown in terms of re-negotiation for some projects of already negotiated terms, which has miffed some Chinese firms.
- Projects like the development of road networks, train networks are in full swing and there is growing trepidation among people over the tall claims of zero load shedding by 2018.
In contrast to the praise for the Governments reforms, the recently released Global Competitiveness Report 2016-17, by the World Economic Forum paints a different picture for the economy. Pakistan is ranked 122nd out of 138 countries, and is at the bottom in South Asia, behind Mongolia, Nepal, Ghana, and Uganda. The report focuses on Pakistan, stating that since 2007 the gap between the best- and worst-performing economies in South Asia has widened, mainly as a result of the deteriorating situation in Pakistan. Pakistan has been cited as the only economy that has failed to improve the macroeconomic environment and health and primary education levels. Category-wise, Pakistan is ranked 85th in innovation and sophistication; 126th in basic requirements; and, 113th in efficiency enhancers. Within these categories specific rankings for Pakistan are: Institutions (111th); Infrastructure (116th); Health and Education (128th); Labour Market Efficiency (129th); and Technological Readiness (119th). The report concludes that Pakistan’s poor competitiveness is a result of the ongoing structural weaknesses, which have over time eroded the country’s manufacturing and industrial base.
As things stand, the recent PTI Rally and the threat from its leader to bring Islamabad to a standstill by end October, seemed to have taken center-stage; till a new controversy was sparked by a news article of potential differences between the Civil and Military leadership. Progress is being certainly made on certain economic, energy, infrastructure and social fronts, but core activities such as Competitiveness, Efficiency, Education, Water, Population, Institution-building, and Healthcare continue to be marginalised. Matters are not being addressed and resolved, but rather delayed and ignored, with the fervent hope that these would somehow magically disappear. It seems that Pakistan is just sputtering along with one controversy after another, throwing a spanner into any meaningful development. The focus of PML-N remains on the 2018 elections and they would be gearing up for that, and trying to ensure that they have the means in place to achieve a victory. The country, however, should not suffer for such ambitions. Meanwhile, life goes on amidst all the uncertainty, rumours, and confusion.