Systemic risk lurks ahead, says Habib Bank CEO

The banking sector will be exposed to a “systemic risk” should the prevailing uncertainty continue for another few months, Habib Bank Ltd CEO Muhammad Aurangzeb said on Friday. Speaking at a summit on financial crimes, the CEO of the largest commercial bank warned the participants about a “big blow to the economy” if the stakeholders didn’t make the right decisions swiftly. “Even the smallest of institutions or the biggest of countries (need) timely decisions, timely execution. We’re not going to back away from the IMF (International Monetary Fund) programme… Whoever comes (to power) after the election will have to deal with the IMF,” he said. The government has been dragging its feet on structural reforms like energy tariff adjustments for many months. Its reluctance to take tough decisions has led to inordinate delays in the disbursement of funds from the IMF. The resulting shortage of dollars has been so acute that the country is finding it difficult to import even the absolute necessities like food and energy items. Banks don’t have the funds to open letters of credit for the industrial sector, which has announced a spate of operational shutdowns because of the unavailability of industrial raw material.