Syed Faraz Anwer Insightful Discussion with Mr. Zafar Masud

Syed Faraz Anwer Discussion

A very insightful discussion of Syed Faraz Anwer with Mr. Zafar Masud, President & CEO Bank of Punjab, focusing on wide ranging economic and fiscal challenges/ reforms, need for augmented tax base and a targeted subsidy model, state of overall financial and female inclusion as well as Islamic banking opportunity and transformation challenges.


Key messages

  1. Strong correlation between economic and political stability – impacts compounded by international/ regional conflicts
  2. Focusing on the fundamental of fiscal deficit and reforms
  3. Increasing revenues by expanding tax base: retail, agriculture and real estate
  4. Replacing current subsidy model with direct subsidies for a) poor and vulnerable b) export-oriented sectors/ flows – to be time bound and performance driven
  5. Promoting Public Private Participation (PPP) in public expenditure and investments
  6. Enormous export diversification and import indigenization potential in many sectors, particularly agriculture
  7. Tech export potential including outsourcing
  8. Current inflation – primarily induced by imports as well as government debt creation and repricing
  9. Considerably lower financial inclusion in retail, agriculture and real estate, warranting tax reforms to ensure documentation
  10. Differentiated skill set, mind set and risk appetite needed to promote agri and SME financing
  11. Specialised institutions under PPP mode may scale up the priority sector intervention
  12. Vast space for improving female workforce inclusion to foster national productivity
  13. Significant business opportunity presented by Islamic banking and challenges underlying in a national level Islamic transformation

Unveiling Pakistan’s Economic and Political Landscape: A Discussion with Experts

This discussion between Syed Faraz Anwer and Zafar Masud delves into a conversation between economic and financial experts Syed Faraz Anwar and Zafar Masud, dissecting the intricate web of economic and political risks that Pakistan faces.

A Perfect Storm: Economic and Political Risks Collide

Syed Faraz Anwer and Zafar Masud concur that Pakistan’s economic woes cannot be decoupled from its political climate. Political instability breeds uncertainty, discouraging investments and stalling economic growth. Currently, political risk is seen as the more prominent concern. The conversation underscores the need for a resolution to regional and international political issues as a prerequisite for economic stability.

Read more: Mr. Zafar Masud Outlines Pakistan’s Economic Future

Fiscal Tightrope Walk: Limited Resources, Pressing Needs

The discussion sheds light on Pakistan’s challenging fiscal situation. The government has limited resources to implement policies that could stimulate the economy, such as subsidies for exporters. Syed Faraz Anwer and Zafar Masud advocate for fiscal consolidation, emphasizing the need to expand the tax net. Currently, significant portions of key sectors like agriculture, retail, and real estate operate outside the formal tax system. Broadening the tax base is seen as a critical step towards generating revenue for essential government programs.

Subsidy Reform: Targeting Efficiency and Effectiveness

The conversation critiques the inefficiency of current subsidy programs. The experts recommend replacing them with targeted support for the most vulnerable segments of society, identified through mechanisms like the National Socioeconomic Registry (NSER) and Benazir Income Support Program (BISP) scorecards. Furthermore, they advocate for export-oriented subsidies with clearly defined performance metrics to ensure they achieve their intended goals. Eliminating wasteful subsidies is seen as a vital step towards fiscal responsibility.

Read more: Fix Fiscal Account to Tame Inflation

Public-Private Partnerships: A Path to Infrastructure Development

Syed Faraz Anwer and Zafar Masud acknowledge the potential of Public-Private Partnerships (PPPs) to improve efficiency in infrastructure development projects. By leveraging private sector expertise and resources, the government can potentially save on costs while delivering much-needed infrastructure.

Read more: Challenges, Opportunities and Pakistan’s Path Forward

Inflation: A Multifaceted Challenge

The discussion acknowledges the presence of two distinct inflationary pressures in Pakistan. Imported inflation, driven by rising global commodity prices, is a concern. However, of greater worry is “dead flation,” caused by an excessive money supply used to finance government deficits. This unchecked printing of money erodes the value of the Pakistani Rupee and reduces purchasing power.

Read more: There maybe further policy rate hike to tackle inflationary pressures — Zafar Masud

Digitalization: Beyond the Hype

The conversation moves to the role of digitalization in Pakistan’s economic future. Syed Faraz Anwar challenges the commonly held belief that digitalization alone will significantly reduce the amount of currency in circulation. He cites India as an example, where a high digital transaction rate coexists with a substantial reliance on physical cash. The experts emphasize that addressing the core fiscal issues and improving tax collection are more critical steps than simply focusing on digitalization.

Financial Inclusion: Bringing Key Sectors into the Fold

Syed Faraz Anwer and Zafar Masud highlight the importance of integrating key sectors like agriculture, retail, and real estate into the formal financial system. These sectors, particularly agriculture with its dominance of small landholdings, pose unique challenges for traditional banks. The experts propose establishing specialized financial institutions, potentially through public-private partnerships, to cater to the specific needs of these sectors and bridge the financial inclusion gap.

Womenomics: Untapped Potential for Growth

The conversation recognizes the untapped potential of women in Pakistan’s workforce. Pakistan has a significant gender gap in education and labor force participation. Anwar and Masud emphasize that closing this gap could lead to a substantial increase in GDP. Investing in girls’ education and creating a more supportive environment for women’s economic participation are seen as crucial steps towards achieving inclusive and sustainable economic growth.

Islamic Banking: A Viable Option with Practical Hurdles

The discussion acknowledges the potential of Islamic banking, particularly due to its focus on profit-sharing and ethical principles. Islamic banks also boast higher average savings rates compared to conventional banks. However, practical obstacles exist. A significant portion of bank funding goes to the government, which would need to convert to Islamic finance before the entire banking system could follow suit. The government’s lack of Sharia-compliant assets creates a further hurdle. Anwar and Masud believe that addressing these challenges is necessary to unlock the full potential of Islamic banking in Pakistan.

Conclusion: A Roadmap for Progress

The conversation between Anwar and Masud paints a nuanced picture of Pakistan’s economic and political landscape. It underscores the complex interplay between these two forces and the need for a multi-pronged approach to achieving sustainable economic growth. Fiscal consolidation, improved tax collection, targeted interventions, financial inclusion, and increased female participation in the workforce are all identified as crucial elements on the road to a more prosperous Pakistan. While Islamic banking presents a promising avenue, addressing the challenges related to government finances is essential for its widespread adoption.

Syed Faraz Anwer: A Leading Figure in Pakistan’s Consulting Landscape

Syed Faraz Anwer

Faraz is a prominent figure in Pakistan’s consulting industry, boasting over 20 years of experience spearheading PwC Pakistan’s Consulting Practice. Under his leadership, the consulting team has flourished, establishing PwC as a frontrunner in the field.

Faraz’s contributions extend far beyond building a successful team. He is a strategic leader who has been instrumental in developing a comprehensive suite of consulting services tailored to address the evolving regulatory landscape and ever-changing market demands. Faraz is not just a leader; he is a thought leader who actively participates in shaping economic and regulatory reforms, ensuring stakeholders remain informed about critical market trends.

Recognizing the burgeoning significance of the digital age, Faraz has championed PwC’s involvement in digital transformation initiatives. His extensive experience working with stakeholders in digital, fintech, e-commerce, and startup spaces makes him a sought-after advisor for businesses navigating the digital landscape.

Faraz’s strength lies in his versatility. He possesses a remarkably broad spectrum of consulting experience, having delivered impactful projects for a diverse clientele ranging from established corporations to emerging players in Pakistan, the UK, and Singapore. His unwavering commitment to client service excellence is paramount. Faraz is not merely a consultant; he is a trusted advisor who fosters genuine partnerships with his clients, ensuring knowledge and skill transfer that delivers lasting value and facilitates lasting change.

Faraz is a well-respected industry voice, frequently gracing prominent forums and conferences organized by professional and regulatory bodies. He actively contributes to thought leadership initiatives, having authored and co-authored articles on various consulting topics.

Key Areas of Expertise:

  • Strategic and Organizational Consulting: Faraz’s expertise spans enterprise strategy, digital consulting, digital payments, digital implementation advisory, and organizational transformation. He is adept at guiding businesses through operating model transformations, change management processes, and performance management implementations.
  • GRC Consulting: Governance, risk management, and compliance (GRC) are another of Faraz’s fortes. His deep understanding of frameworks like Basel II, Basel III, COSO, and financial crime mitigation strategies makes him an invaluable asset for clients navigating the complexities of regulatory compliance.
  • Technology Consulting: Faraz possesses a comprehensive understanding of core technologies, business analytics, risk engines, finance applications, loan origination systems, data warehousing, and regtech solutions. He can expertly guide clients in leveraging technology to achieve their business objectives.
  • Big Data and Analytics: Big data and analytics are revolutionizing business decision-making. Faraz’s expertise in this domain empowers clients to harness the power of data for enterprise-wide insights, predictive modeling, and data management strategies.

Faraz’s exceptional blend of experience, thought leadership, and dedication to client service places him at the forefront of Pakistan’s consulting landscape. He is a trusted advisor and a key driver of innovation within PwC Pakistan, shaping the success of businesses across various industries.

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