The rupee has fallen to yet another record low: 78.20 per dollar. The eventual removal of the floor from the Karachi Stock Exchange has raised the spectre of a freefall of all the scrips - a situation that led to a meeting between all the stakeholders on Monday with the objective of formulating a comprehensive fiscal and monetary policy to provide the critical liquidity to the bourses.
The State Bank Governor, Shaukat Tareen, the man tipped to become the Advisor to the Prime Minister on Finance, Syed Salim Raza, the man tipped to take over as SECP Chairman, as well as the KSE Chairman and Managing Director. Not present was the Finance Minister or any member of his team.
This would imply that the fiscal policy is unlikely to change in the near future as a consequence and that the State Bank has been directed to play a lead role in this regard.
Those who participated in the meeting would do well to remember what Paulson, the US Treasury Secretary, said in a recent press conference after presenting the 700 billion dollars bail-out package to Congress for approval: the objective of any bail-out package is to protect the small investors and the long term economic targets or in other words for the public good - a goal that would automatically generate bipartisan support.
While Democrats are expected to debate the bail-out package from the perspective of the outrageous executive compensations yet Republican Donna Edwards put it succinctly: "This can't just be about taking care of Wall Street and not taking care of Main Street.
We have people who are losing their jobs and their homes, and I want to make sure that whatever package we come up with next week clearly should stabilise our financial markets but also do something to stimulate this economy, so people are put back to work and they're not losing their homes."
Thus the rationale for intervention by the Pakistani authorities must remain the public good. In this context, it was revealed that the package of monetary measures would include immediate, short and medium term measures and there was reportedly a debate on providing credit line or REPO facility to institutions investing in a market stabilisation fund.
However, the exact dimensions of this fund are not yet identified. It was reported that during the meeting the State Bank Governor did mention that the State Bank had injected 200 billion rupees in additional liquidity since July this year and would have to carefully consider any further injections given the rate of inflation.
Meetings that have taken place under the chairmanship of the State Bank governor to deal with this impending crisis deserve to be lauded. However, it is hoped that the decision to inject huge amounts of liquidity into the system may not be left to the bureaucrats alone.
It must be presented to parliament so that bipartisan support can be garnered for the purpose and only then must the bail-out package be sent to the executive branch of government for final approval. As President Zardari stated in his speech to the joint sitting of parliament last Saturday, "the days of constitutional deviation and bypassing parliament while taking decisions of national importance are over.
As head of state I wish to make very clear that the President and the government must always seek guidance from the Parliament in carrying out our duties." One would hope that this bail-out package would form the first example of this commendable vision.
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