In the Kingdom of Sharifs, there is no room for dissent. And Riaz Riazuddin, the acting governor of the State Bank of Pakistan (SBP) till recently, learnt this the hard way. His decision to allow the depreciation of the rupee against the dollar came as a welcome surprise to the market as well as economists, but didn’t go down well with Nawaz Sharif’s most trusted lieutenant, Finance Minister Ishaq Dar.
As a result, the central banker with more than two decades of experience, who could have stayed at the acting position till the end of July, was not only removed from the acting job immediately, but is now facing an inquiry as well. And to no one’s surprise, the government appointed Tariq Bajwa, a close confidant of Dar, as the SBP governor.
And it’s not only the central bank that is facing the music. No regulator in the country is allowed to do their jobs in a professional and independent way. And the appointment at the SBP once again makes it clear that the government only wants people who think the way it does, rather don’t think at all and simply agree to what the rulers want. Bajwa, who just retired as the finance secretary, has had a successful career as a bureaucrat, having also served as the chairman of the Federal Board of Revenue as well as the finance secretary of Punjab. But one thing is clear, at the central bank he can do nothing against the will of Dar and company. As some analysts say, his credentials may be better than some of the past governors, who were also handpicked by the government, but it is unlikely that he will show spine as far as an independent monetary policy and exchange rate regime is concerned.
His immediate test is how he handles the investigation into the rupee depreciation, ordered by Dar. While Riazuddin is being ‘blamed’ for the depreciation, one needs to realise that the governor could not have acted alone in taking this decision – a decision which should have been taken much earlier. And if the new governor is not able to convince Dar about dropping the inquiry, it would not only send a wrong message within the SBP, but also to the financial markets. And while it is already obvious, any action will reinforce the view that the government does not want institutions to work independently, and only wants them to move according to their will and obsessions. One such obsession with a strong rupee has already left Pakistan’s exports uncompetitive, resulting in a widening external account deficit. But in the view of the stubborn Dar, all the economists around the country, the financial markets, and even the International Monetary Fund are misguided when they say that the rupee is overvalued.
Meanwhile, the head of the other financial markets regulator, the Securities and Exchange Commission of Pakistan (SECP), is already preparing criminal cases for allegedly tampering with documents to support the Sharif family in the ongoing scandal. However, he has not been removed from his post despite these charges. This basically testifies to the fact that you either have to be a dummy or a crony to survive.
Another head that has rolled for doing his job rather than succumbing to government pressure is Dr. Fiaz Ahmad Chaudhry, the managing director of the National Transmission and Despatch Company (NTDC). Chaudhry was removed by the NTDC’s board of directors on July 7. His fault was that he opposed moves for commissioning more power generation agreements after the government had already signed deals for 42,000 megawatts. His logical argument was that the country had already signed up for enough power generation, and any more agreements would be against national interest. But while he was correct about what was good for the country, he disagreed with the viewpoint of those in power, who felt he was a hurdle and hence was removed.
All other regulators, including the National Electric Power Regulatory Authority (Nepra) and Oil and Gas Regulatory Authority (Ogra) are already in trouble as part of the government’s drive to control everything and end the independence of all institutions, so that they can bow down to the will of the rulers instead of being logical.
Last, but not the least, in the list of these regulators in the Pakistan Electronic Media Regulatory Authority, commonly known as Pemra, which is doing everything it shouldn’t. Acting on behalf of the Sharif government to curb any voice of dissent, the regulator’s only job seems to facilitate those who shower praise on the government, and are trying to rescue it from the Panama scandal. On the other hand any voice of reason, trying to inform the public of the truth, faces bans and fines. Perhaps, it’s time that all of Pakistan’s regulators set up offices abroad and their heads stay there, so that they can work independently and free of government pressure and political interference.