The Governor, State Bank of Pakistan Mr.Yasin Anwar has resigned. His appointment though controversial and widely criticised is no more an issue; his exit under duress certainly is.
An international banking expert and a dual citizen, he was known more as a corporate bankerlacking macroeconomic experience tohandle a mismanaged economy. His limitations were evident in his lacklustre participation in IMF negotiations. Commentators opine that his profile was suitedto facilitate financial misdeeds of the governmentand downgrading the role of the central bank in regulatory oversight.
Yasin Anwar did oblige the government after his appointment. He slashed interest rates by 1.5% despite opposition by the financial committee of the bank dominated by macro economists. In view of the new Central Board of Directors loaded with industrialists and micro economists, this committee became obsolete leaving doors ajar for political manipulation. A case in point is the affairs of the National Bank of Pakistan. So far the federal government has successfully blocked a move to discuss accounts that extended billions of rupees on questionable collaterals to successive governments. During his tenure the central bank did irk the government on some economic indices that contradicted Ministry of Finance. Yet it did little to reclaim the autonomy of an institution from political interference superimposed by a politicised Board and Ministry of Finance.
But every camel has a back and the straw that broke it pertains to a principled stance he took on a private bank trying to acquire HSBC. Though, to parry criticism, his exit may now be justified on counts of his dual nationality and poor performance, the untold story is different. His exit reflects the politicisation and failure of all regulatory mechanisms in the country. It puts a question mark on the future of all autonomous and semi-autonomous organisations of Pakistan; some ready to be privatised at the hands of interested tycoons. Besides sale purchase of HSBC Bank, there are many other issues that have claimed scalps of regulatory bodies for noncompliance of political directives. A part of the story begins here.
Mr Muhammad Ali, was appointed as the Chairman and Commissioner of Security and Exchange Commission of Pakistan in 2012. He proved his worst critic Barrister Amber Dar wrong and proceeded to reorganise the entire department. By 2013, he with the assistance of Amber Dar who had recanted her criticism and National Accountability Bureau proceeded to produce five regulatory manuals for the commission to contain fraud and ensure transparency.  These manuals stood in the way of the purchase of HSBC to JS Bank. As a result, the Supreme Court suddenly awoke from slumber and declared the appointment of Chairman NAB and Mr. Muhammad Ali lacking due process.
In course of time neither the politicised loans of National Bank nor the change of hands on HSBC will ever come under discussion. This is a tip of the iceberg in which Pakistan’s assets will soon become a commodity a la SabziMandi. Inward and outward capital lines will be eclipsed. As a result uncheckedfinancial leakages will continue to soar making the dollar-rich richer both through unchecked corruption and devaluation of rupee. Investments in Pakistan will only come in sectors where regulatory mechanisms are compromised and windfalls can be made in quick time. At stake is the household silver.
An evaluation carried out by a GHQ monitoring team led by me and working with the federal government in May 2000 reached bizarre findings. The estimated slippages and corruption per annum was approximately 1.6 Trillion rupees meaning an average daily loss of Rs. 4.38 billion to the national exchequer. The emphasis therefore was in making and tightening regulatory mechanisms. Consequently numerous regulatory authorities were raised and improved on daily basis. Leakages and corruption were controlled. State Bank under Dr.Ishrat gained more autonomy and enforced its role as a regulator. Within two years Pakistan’s economy was on wheels and foreign exchange reserves began to build. But, there were Trojans to ensure that they exercised manipulative controls on the economy. Amongst them were the reorganised Pakistan State Oil, independent power producers with their hidden manipulative mechanisms and supply chain anomalies.
Twelve years hence, these authorities built so diligently have been systematically denuded with political tinkering. In 2012, the Chairman National Accountability Bureau came up with a daily corruption figure of 8 Billion Rupees (a national loss of over 2.9 trillion rupees). Later, he revised it to 12 billion implying an annual loss of 4.38 trillion. The figure did not surprise me as it coincided with the progression of figures reached in 1999-2000. Maybe, the slippage is even more. In case these corrupt trends are reversed through vigilance, Pakistan’s Gross Domestic Product will take an exponential jump within a year and economy will be resurrected beyond a comfortable level of more than 5 % growth. It is also possible to reverse the exorbitant profits and artificial costs of energy manipulators for good within this period. But this is neither likely to happen nor draw the attention of the government or the media towardsthis daylight robbery. They who matter stand to gain most from the situation.
Hence, the resignation of Mr. Yasin Anwar indicates that most regulatory mechanisms are likely to melt further. The interference by the industrialists and micro economist reinforced by an over bearing Ministry of Finance will ensure that the central bank cannot execute policies that deny a honeymoon. The same will also apply to other regulators. Those who resist will either be removed through administrative action or through the judiciary or forced to resign. The merry making will continue come the ides of March, when the government will sit to draft the next national budget.
By mid-2014, Pakistan is likely to plunge into its worst economic crises. Foreign exchange reserves would have dwindled beyond a critical low. Domestic borrowing from private banks would have reached alarming levels, reinforcing their capability to manipulate fiscal policies. The circular debt would have swelled to astronomical levels. Power shutdowns will be disruptive. Even the loot sale of national assets for which this manipulation is being done will not suffice to stem the rot. Poverty graphs will be broad and vertical. Successive devaluations will mean cheaper exports, more expensive imports and an exponential rise in foreign debt. The machines printing currency in overdrive will jam.
As the babus of the finance ministry sit to work out figures, they will realise that the fiscal deficit has moved beyond 8% to around 10 billion dollars. The figure will overhaul Pakistan’s reserves. The obvious reaction will be a tax hike against those who already pay taxes, high cost of energy and hyperinflation. The consumer price index will plummet to its nadir. With no energy, industries will not be able to produce value added exports. Raw materials with less earning margins will be channelized into overseas industries of the rich shoring more profits. Political effects will result in worsening law and order.
But what will happen to a common man. The Godot will never come till they do not rise to become Godot themselves. Will 2014 be the year of the revolution? Only then will the sinkhole become the stink-hole.

The writer is a retired officer of Pakistan Army and a political economist and a television anchorperson.