good, nor evil. but they remain very powerful tools that distribute bis central bankers ’ speeches goods and services across the economy. regulation is necessary because it gives markets a direction, and can govern them with a set of values, which markets do not possess innately. less, but more effective regulation is the need of the hour for our own economy too. it ’ s an essential part of what is needed today to get the economy on a track for steady and sustainable growth. the government ’ s footprint in some sectors of the economy is very large, and quite negligible in other sectors. such divergence is unhealthy. for instance, the government has a very large presence in our agriculture and energy markets. those sectors are, in some ways, over - regulated. too much regulation and red tape can breed incentives for the abuse of power, mismanagement and corruption. it also acts as a disincentive for the private sector. and we must remember here that it is always the private sector that functions as the engine of the economy. however, effective regulation is sorely lacking in other sectors. the tax machinery can be tightened considerably. one of the country ’ s most challenging problems today is the size of the fiscal deficit – and a large part of the solution lies in increasing our tax base by enacting regulation that encourages tax compliance, and punishes tax evasion. the link between better tax collection and faster economic growth deserves to be flushed out here. better tax collection means that the government has to depend less on foreign support for its budgetary needs, and can decrease its fiscal deficit. more importantly, the government will not have to borrow as much from the domestic banking system to finance itself. less borrowing from commercial banks will encourage market rates to fall and banks will lend more to the private sector. as investment picks up, the growth potential of the economy increases. similarly, the government will need to borrow less money from the central bank as well. borrowing from the central bank is popularly known as printing money. this is inflationary, and i don ’ t think i need to introduce you to the problems associated with high levels of inflation. if government borrowing from the central bank falls, inflation will follow suit. therefore, better tax collection is a necessary condition for faster economic growth. and for that we need to have more effective tax regulation. another problem that we desperately need to fix is our energy problem. it ’ s something that has been affecting every citizen of the

to play in it. and i ’ d like to briefly touch upon that here. the state bank has always ensured that the financial system of the country remains safe and stable. we may not have always gotten things completely correct, but we have made sure that banks remain healthy and depositors ’ money remains safe. we have managed to do this despite privatizing the banking system almost entirely. this means that capital is now allocated more efficiently, and private sector businesses can borrow freely for their requirements. i must add though that we are a little disappointed with the current risk aversion of the banks. the reforms process was initiated in the early 90s and focused on more private sector participation as financial intermediaries ; developing a more robust regulatory framework ; restructuring banks ; and developing non - bank financial institutions ( also known has nbfis ), bis central bankers ’ speeches as well as equity and bond markets, as alternatives to the banking system for both savers and borrowers. the financial sector was essentially given a completely new look during the course of that decade. the purpose of all these changes was to enhance competition and efficiency in the financial sector. that would mean that capital gets allocated into productive investment, which can drive future growth. simultaneously, as banks became more efficient, savers could receive a better return on their deposits and borrowers could finance themselves at lower rates. the robustness of our financial system, is a direct consequence of the reforms process and the state bank ’ s constant vigilance. there ’ s a lot that can be improved in our financial system – for instance, i would love to see the development of efficient debt markets, even better regulatory and reporting practices, and the broadening of the financial sector ’ s scope to include largely unbanked, such as agriculture, small and medium enterprises, and housing. despite this wish - list, the fact remains that our financial system is, by design, secure and does not pose any threat to the economy as a whole. now let ’ s turn to the features of this economy that have, helped the country become and remain resilient in the face of adversity. i believe that our social system in pakistan influences why the economy remains resilient. our family structure is a huge blessing in economic terms. children take care of their parents, and that spares the state from the responsibility of taking care of the elderly and sick. governments in developed economies are currently struggling to meet their social commitments, with healthcare costs sur