Page 15 - CMA Journal (Sep-Oct 2025)

E x c lus iv e I nt er v iew

ICMA: If you look across Pakistan’s industrial
Fiscal and external account landscape, which sectors do you feel are just waiting
imbalances originate due to for the right push to become real game-changers?
Dr. Ishrat Husain: I am of the rm view that no
fiscal imprudence, and the economist, planner, bureaucrat, or international agency
can have the foresight and perfect knowledge as to
private sector is crowded out of which sectors would emerge as winners or game
changers. We should provide a level playing eld and let
the bank credit market as the the businesses themselves choose the sectors or sub
public sector dominates sectors in which they can earn decent returns. This would
reveal the comparative advantage that Pakistan has
vis-a-vis other competing countries.
Past policies have failed because rent seeking activities
Unless we drastically revise our rules of business and have ourished with the support of the government.
processes, revamp the whole value chain of human The role of the government should be that of an enabler
resource management, introduce e-Government, and and facilitator, investing in human capital and skill
bring in domain experts and specialists in the formation, infrastructure, research and development, etc.,
government, business as usual would prevail. rather than a protector of some industries or another.
ICMA: From your years as Governor of the State Bank, ICMA: In your experience, what is the best way for
what lessons on reform and policy still ring true for government and business leaders to work together
reviving industry today? so reforms don’t just stay on paper but actually get
Dr. Ishrat Husain: SBP has built a solid reputation upon delivered?
three pillars: (a) quality human resources recruited on Dr. Ishrat Husain: Successful developing countries have
pure merit through open competition, groomed and followed a model where the state, private sector, and
upskilled continuously, evaluated on the basis of civil society organizations work together in a
performance, and paid market-based remuneration; (b) collaborative and cooperative manner. On the contrary,
continuous technology upgradation and digitalization, we are constantly engaged in an adversarial blame
eliminating redundant processes and simplifying game, the private sector blaming the government and
procedures; and (c) strong and e ective supervision of vice versa, while civil society blames both. Unless we
the banking sector driven by internationally recognized change this mindset, the possibility of sustained growth
nancial soundness criteria. is likely to remain evasive. Competitive markets produce
and allocate goods and services e ciently, while the
System-wide measures to strengthen the quality of state distributes the bene ts of growth equitably. Civil
human resources and the documentation of the society complements both.
economy and payment system through digitalization
would have a bene cial e ect. ICMA: And nally, if you had to pick just one or two
bold reforms to kick-start Pakistan’s industry, which
ICMA: How damaging is policy inconsistency for ones would top your list?
businesses and investors, and what can be done to Dr. Ishrat Husain: Fiscal consolidation in the form of
bring more continuity? mobilizing resources from individuals, rms, and sub
Dr. Ishrat Husain: Lack of sound policy continuity and sectors which are not paying or are evading taxes,
predictability, combined with inconsistency and non- targeting subsidies on food, energy, agricultural inputs,
transparency, has acted as a disincentive for both health care, and girls’ education for poor households,
domestic and foreign investors to expand their existing and curtailing the size and outreach of the federal and
capacity or take up new ventures. This has resulted in a provincial governments while resourcing and devolving
low investment rate and consequently a low growth rate. service delivery to elected local governments is at the
Our investment to GDP ratio has remained stagnant at top of my list. Fiscal and external account imbalances
around 15 percent for the last 25 years, while India and originate due to scal imprudence, and the private
Bangladesh have increased theirs to 30 percent. You can sector is crowded out of the bank credit market as the
see the di erence in the respective growth rates, 3 public sector dominates. The other reform I would pick is
percent for Pakistan and 6 to 7 percent for both India and civil service reform and aligning it with modern
Bangladesh. Security concerns have also kept foreigners structures, practices, and processes.
away from Pakistan. Enlightened political leadership, The Editorial Board thanks Dr. Ishrat Husain, Former Advisor to
rather than narrow self-interests, can bring about the Prime Minister on Institutional Reforms & Austerity and
Former Governor, State Bank of Pakistan (SBP) for sparing his
continuity, consistency, and predictability and put the precious time to give an exclusive interview for Chartered
country on the right track. Management Accountant Journal.

ICMA’s Chartered Management Accountant, Sep-Oct 2025 13