“I heard Shaukat Tarin trash the policy of the State Bank of Pakistan (SBP) to raise the discount rate to a whopping 13.25 percent which he maintained had crippled economic activity…”

“Did you hear the rejoinder by the Governor SBP?”

“No I missed that… Was his response to lob back the ball in Tarin’s court? That is our national character isn’t it! Don’t accept blame and…”

“Yes he did, he said that in 2008 and 2010, the years that Tarin was the finance minister, the discount rate was 13 percent and…”

“Did he bother to mention that core inflation, to which the discount rate was pegged by all his predecessors, was 18.9 percent in February 2009 and 13.6 percent in December 2010…hang on let me finish while it was around 6 to 7 percent in 2019 when the rate was upped to 13.25 percent in 2019.”

“No he didn’t, and wasn’t asked about it….and therefore he wasn’t even asked why he deemed it appropriate to link the rate to consumer price index instead of core inflation with no justification provided to this day…”

“Tarin also trashed the speed at which the rupee was allowed to depreciate – from 112 or so rupees to the dollar to 165 rupees to the dollar – which he claimed fuelled inflation and that makes me very uncomfortable with respect to the proposed SBP bill to grant greater autonomy to SBP…”

“You mean with policies being implemented without research and…”

“The SBP on its website claims that the real effective exchange rate it calculates and uploads is not an indicator of the rupee being undervalued or overvalued since it’s calculation is a long term process and…”

“Is it longer than five years?”

“Where did that come from?”

“That’s the term of the governor of the SBP as per the proposed amendment bill and…”

“Well, he has been in the post for two years and that isn’t long term because there has been no indication as to whether the real effective exchange rate…”

“But didn’t the IMF calculate the real effective exchange rate during Dar’s tenure? When it said that the rupee rate was over valued between 5 to 20 percent…”

“That’s a very wide margin – you reckon our current head of research was the one who calculated…”

“Don’t be facetious.”

Copyright Business Recorder, 2021