The Banker Magazine of London, a subsidiary of the Financial Times, has honoured Ishrat Hussain by declaring him as the Central Bank Governor of the Year for Asia. The famous magazine arrived at the choice in view of his leadership at the helm of the State Bank of Pakistan that has championed and driven the reform and restructuring of Pakistan's financial sector. The reforms at the SBP and in the banking system, according to the Banker, "have resulted in a more resilient and efficient financial system that is better placed to absorb significant macro-economic shocks.
More than that, the SBP has progressively improved its capacity to manage and maintain macro-economic stability. Pakistan has transformed its largely state-owned and weak banking system and Pakistan's financial sector is now more competitive and relatively efficient.
The financial infrastructure has strengthened and the regulatory and supervisory functions of the SBP have improved."
Ishrat Hussain's achievements as listed by the Banker are impressive indeed. In our view, he could also be credited for some excellent performance in certain other areas.
He has made good use of the autonomy of the State Bank and his personality is so imposing that monetary and credit policy of the country is now exclusively managed by the central bank, with Islamabad's control on the affairs of financial sector and bureaucratic and political interference in the working of the banking system has been reduced to the minimum.
The problem of infected portfolios which once threatened the viability of the banking system of the country is being dealt with properly. Privatisation programme of financial institutions has progressed almost according to the schedule and the State Bank has encouraged use of modern technology in the financial sector.
Governor, Ishrat, through his statements and speeches and SBP publications, has also kept the nation fully informed about the state of the economy, its problems and prospects.
The SBP views on the economy are now so much respected that these are often quoted by international agencies, their experts and analysts and even by the opposition parties in Pakistan. A nearly insolvent country, when Ishrat Hussain was appointed as Governor, Pakistan is now blessed with an adequate level of foreign exchange reserves.
The most outstanding achievement is of course the maintenance of price stability (as measured by indicators like CPI) which is by far the most important function of a central bank.
While the accomplishments of the Governor are well known and needed to be recognised, it would have been difficult for him to make such a singular contribution and earn this distinction without inheriting an enabling environment.
His predecessors had to fight hard to win and retain the autonomy of the State Bank which, not long ago, was considered a subsidiary department of the Finance Ministry.
The enhanced space and flexibility now available to the State Bank allows it to make the right decisions falling within its domain in time and according to the exigencies of the situation. Also, Ishrat Hussain has been very lucky in having a Finance Minister and a Head of the State who are extremely keen to improve the economy and extended him whole-hearted support in his field without questioning his judgement.
It is undoubtedly easier to take the right but unpopular measures in a military dispensation. A part of the success could also be attributed to the external environment after 9/11 which forced the Pakistani expatriates to remit large amounts of foreign exchange to their home country and removed an important policy constraint on the SBP.
All of this, however, is not to say that Ishrat Hussain's choice as Governor of the Year for Asia was some kind of fluke but only to put things in proper perspective. It is important to note that this is for the first time in the history of Pakistan that any State Bank Governor has won this high honour and that internationally recognised magazines do not confer such awards without solid and defendable reasons.
The nation must be proud of its citizens who are acclaimed the world over for their great contribution. We feel that Ishrat Hussain fully deserved the distinction bestowed on him and would like to congratulate him on it.