The central bank in any country is the most important institution and without its effective performance steady growth and development remains elusive and impossible.
Due to this recognition, the best central banks across the globe are equipped with the best possible relevant human resources.
Certainly, a no-compromise policy on the human resources front has led to pay them dividends in terms of maintaining price and financial stability as well as achieving a sustainable and inclusive economic growth.
However, the State Bank of Pakistan (SBP) in general remained void of relevant best possible human resources at critical levels to provide the right input to the policy makers. This has led to policies that produced counterproductive outcomes such as destabilisation of prices, financial disintermediation and a retarded growth.
It goes without saying that it is primarily the failure of successive governments, irrespective of political divide or even military or democratically elected regimes. To achieve short-term gains, the SBP’s health was compromised by plugging irrelevant and ill-equipped human resource at the top.
To help achieve short-term objectives, the dummy leadership in turn encouraged a ‘yes boss’ culture within the institution over time by promoting/retaining ill-equipped and largely irrelevant ‘yes boss’ staff while forcing capable, relevant and competent individuals to quit the institution so that the political bosses could smoothly be made happy.
For example, during the last seven-eight years, more than 30 highly qualified returning PhDs to the SBP from across the globe (on scholarships from HEC and other donor agencies) with relevant specialisation in areas of monetary policy, banking and finance, human resources and knowledge management were victimised in one way or another, thus leaving them with no choice but to quit the SBP. This number of quality resource brain drain from the SBP is huge enough to help it win top position in the world’s record of central banks’ with the biggest brain-drain in less than a decade’s time.
The banking and finance and human resource sides of the SBP are extremely deficient in attracting and retaining highly qualified human resources compared to any standard central bank. To start with, the evaluation and discussion in this article is focused only on the ‘capacity and capability’ of the critical human resource of ‘Monetary Policy and Research Group’.
It is because on one hand, the key departments from this group have the most highly qualified staff compared to any other group within the SBP, while on the other hand, the monetary and exchange rate policies’ feedback that comes from this group has utterly failed. And undoubtedly these policies remain the major contributors to the recent economic crisis of the country.
The international HR standards of central banks indicate that human resources involved in monetary and exchange rate policy formulation process are individuals with higher qualifications, specialisation in monetary and exchange rate policy, with demonstrated research capabilities exhibiting the capacity not only to grasp the global ongoing knowledge advancements in the field but to conduct and steer such research and hold relevant policy dialogue/discussions for optimal policy making within the institution. Whether the SBP is equipped with best possible resource to help conduct right kind of monetary and exchange rate policy, the profiles of the critical staff at technical level starting from executive to lower tier management positions (technically from OG-8 to OG-5) from three core departments were analysed and evaluated against five standard yardsticks, namely qualification, specialisation, research relevance, level of research capacity, and level of experience.
The evaluation shows that as against the standard yardsticks for such crucial positions, (i) less than half of these senior level positions are non-PhDs, (ii) none of the PhDs have specialised in monetary or exchange rate policy, and (iii) they did not exhibit research excellence as none of them could produce even average quality research in monetary or exchange rate policies, (iv) whatever research they could produce in areas of economic enquiry other than monetary and exchange rate policies is extremely substandard, not even qualifying the lowest category “C” as per international ranking for research quality with Research Advisor and a Senior Economist being the exceptions as the former could produce several “A” quality research outputs while an A ranked research publication was found principally authored by the latter.
Overall, this grid implies that the existing team at the SBP is a cricket team that is supposed to play high-quality cricket amid a high level of competition, but practically attempts are made to achieve the goal through naïve soccer, badminton, tennis, and rugby players.
Thus, the recurring failures in the game of monetary and exchange rate policies should be blamed at none else but flawed institutional HR policies and priorities, which come with a heavy toll and consequences for the entire nation.
On one hand, the SBP governor will have to deal with challenges related to the on-going stabilisation, while on the other he will have to initiate reforms to strengthen the decade long decayed human resource base at the SBP by attracting most relevant and competent Pakistanis both from abroad and within the country.
Not only this, but SBP Governor Dr Reza Baqir would have to ensure an internal environment to allow them to contribute and flourish on merit rather than ‘yes-boss-basis’ and should constantly resist and circumscribe the deeply entrenched, empowered and clever forces within the institution to execute a positive change in the institutional environment for the long-term benefit of the institution and economy.
Without placing merit based policy, the best human resources could not be attracted. The institutions could not be strengthened with mere slogans and political rhetoric so the government should finalise reforms as early as possible but so far nothing substantial was done to implement desired objectives.
The writer is a staff member