LAHORE, April 15: Foreign exchange reserves, presently touching $5.2 billion, are a matter of daily debit-credit balance sheet of the State Bank and, precisely for this reason, no one can fudge these figures.
This was stated by acting governor of the State Bank, Rashid Akhtar Chughtai, here on Monday while talking to reporters at the diploma distribution ceremony of the Pakistan Banking Institute. He was commenting on the opposition’s claim that the government was quoting inflated figures of foreign reserves to paint rosy picture of the economy. The figures can always be verified, even after years, he said.
The government, he said, was preparing a corporate rehabilitation law to give a second chance to the sinking industrial units. A revival plan would be prepared for every industrial unit so that it can stand on its feet. The revival, he maintained, would minimise loss for everyone—the bank, the owner and those working in it.
Talking about government’s claim about inflation reduction but its failure to ameliorate common man, the governor said: “Squeezing investment, both international and national, in the country has resulted in a few, or no, job opportunities. This is the reason for continued poverty of common man.”
Inflation is a relative term. No one is bothered if economy keeps growing and income of the common man remains ahead of so-called inflation. It only hurts when income goes down and inflation up. At present, problem with Pakistan is shrinking business activity and economy, Mr Chughtai pointed out.
Talking about expected slide in interest rates, the governor said that it was going down but not quick enough to generate economic activity. Presently, banks are lending even at a rate of 10 per cent, which is low. But economic activity has not been responsive enough.
“There has been no bad debts after 1997, and this is the only hope of economic revival,” he claimed. All bad debts belong to pre-1997 era. This means that financial system is strong enough now to put the economy on sound footing.
Earlier addressing the gathering, the governor maintained that due to lack of trained manpower with decision making ability, and in some cases, absence of a clear vision as to direction of the bank, a new phenomenon has emerged on the banking horizon— the contract employees.
These contract employees fall in two categories; those employed at a shamelessly low salaries and those at sky-high emoluments. Contractual employees at high salaries are being employed without clear-cut objectives to fill the vacuum created by rightsizing and golden handshakes.
While the high cost managers might have the experience of operating in a highly sophisticated system, these contract consultants, coming as they do from different corporate cultures, having no ownership or commitment for the institution and often lack the “soft skill” that are congruous to the systems, values and other ground realities of the institution they are asked to serve, Mr Chughtai added.
Lack of direction and, in some cases, due to conflicting approaches, even the chief executives are at loggerhead with the board that eventually hurts the reputation of the institution and its sustainability.
Such people, when inducted directly into the banking sector at high position of responsibility tend to polarise staff rather than creating synergies.
External employment of short-term consultant for specialized functions should be planned in a manner that the regular recruited staff are attached to gain from the consultants expertise and develop sufficient skill to take over their function over a period of time, he concluded.