Appointed in December 2005 after 15 years at the Asian Development Bank, Dr Akhtar managed to tighten monetary policy and through decisive action was successful in 2006 and 2007 in sustaining a downward trend in inflationary pressures while facilitating record strong growth in the economy. Real GDP growth in the fiscal year to June 30, 2007 reached a solid 7%, up from 6.6% the previous year, while inflation dipped to 7% from 7.6% the previous year. Monetary tightening has had the important impact of maintaining hard-won macroeconomic stability that has encouraged increased investment flows.
Solid financial management and privatisations have helped produce strong results in the banking sector. In 2006, the combined profits of the banks reached $1.4bn, compared with a $488m loss in 2000, and return on equity reached a healthy 24.2%, providing a positive stimulus not only in the Karachi Stock Exchange but across the economy. Another important central bank strategy shift has been the decision to gradually reduce commercial banks’ reliance on refinancing facilities and encourage banks to fully accommodate private sector and export credit requirements, thereby helping the private sector.
With private sector credit growing annually at 25% over the past three years, the banking sector is now able to grow and improve on the low banking penetration across the country; only about 30% of adults in Pakistan have bank accounts. Dr Akhtar believes there is a high degree of financial exclusion and she has outlined a comprehensive strategy to improve access to financial services to the poor through a far-reaching microfinance development plan and the expansion of branch networks and Islamic banking in underserved areas.
In a country that badly needs political stability and also viable financial services, Dr Akhtar is making a marked difference in the financial sector.
