Key state arms running affairs on ad hoc basis

KARACHI: Since the onset of Panama Papers scandal, political upheaval has hurt every aspect of the country, particularly the economy and state institutions.

With the ruling party’s focus on the National Accountability Bureau (NAB) and court proceedings coupled with finance minister’s absence, the attention towards structural reforms has remained significantly low in the current fiscal year.

An election year for any government is known for increased fiscal expenditure targeted at winning the popular vote. However, in this last year of power the government appears to be struggling even with completion of ongoing projects, let alone initiating any new plans.

Measures to stabilise major macroeconomic indicators are lacking. This provides room for multilateral organisations such as the International Monetary Fund (IMF) to fill the policy vacuum as was recently witnessed in rupee’s depreciation.

State institutions also appear to be bearing the brunt of this episode. Performance of the finance ministry has been limited considering the continued absence of the finance minister.

The Prime Minister’s Office appears to be handling all matters relating to the economy rather than the ministry which has the relevant experience and expertise in such matters. With the recent appointment of the adviser to the prime minister on finance, it seems the PM’s Office will remain at the helm of affairs.

It is difficult to assess how a prime minister busy with managing the country can efficiently manage the economy.

Similarly, the Securities and Exchange Commission of Pakistan (SECP), in particular, has remained the focus of attention this fiscal year ever since proceedings of a joint investigation team commenced and the tampering accusations came to the forefront. Following suspension of the former chairman, whose tenure ended this month, the SECP has been limping forward with its reforms for the corporate sector and capital market.

During this time, the benchmark KSE 100-share Index has lost over 25% in value. Moreover, the Pakistan Stock Exchange has been operating through acting chief executive and chief regulatory officers for almost half a year.

While such problems are generally observed for short periods during transitions, functioning in an improvised manner for such a large period of time can cause irreversible damage to the institution and the market.

Presently, the SECP is being headed by a commissioner on an acting charge for over five months. With recent retirement of three commissioners, the SECP now only has two commissioners responsible for running its affairs.

The law under which the SECP has been established requires that at least five and at most seven commissioners must be appointed by the federal government.

A high court judgment announced a few years ago makes it mandatory for the government to only appoint a full-time chairman once the quorum of five commissioners is complete. An organisation operating under such conditions is expected to be sub-optimal at best which adversely affects the entire industry.

For such an important institution which regulates the entire corporate sector and capital market in the country, it is critical that it has a complete senior management in place. However, lack of political will is resulting in an institutional decline. Governments are mandated by the people to protect interests of the public and the country. Although the present government might be engaged elsewhere, it is still expected to perform its duties.

Any delay in implementing economic policies or such appointments are compromising national interests.

Published in The Express Tribune, January 8th, 2018.

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