Pakistan Muslim League-Nawaz (PML-N) leader and main spokesperson for party supreme leader Nawaz Sharif, Muhammad Zubair, has said that the PML-N will not allow the State Bank of Pakistan (SBP) bill, which grants the bank great autonomy in line with the recommendations of the International Monetary Fund (IMF), to pass.
The federal government had agreed to grant absolute autonomy to SBP. The central bank’s primary objective under the SBP Amendment Bill, 2021, would be to ensure domestic price stability as it would be free from the responsibilities of supporting economic growth and providing budgetary loans to revive the stalled IMF programme.
The bill states that supporting economic policies has been declared as a “tertiary objective” of the central bank, while the National Accountability Bureau (NAB) and the Federal Investigation Agency (FIA) cannot investigate the SBP governor, deputy governors, its executives and board and committee members.
“On behalf of our party we have a lot of reservations and this is equal to snatching Pakistan’s freedom. The SBP will now have even less powers than the central bank of India before 1947,” Zubair stated while addressing a press conference in Karachi, though he refused to go into the reasons behind his party’s opposition against the bill.
Zubair said that the PML-N had no reservations on the SBP being an independent institution but did have reservations over the fact that the bill was being brought at the behest of the IMF.
“The IMF and World Bank have been trying since quite some for a bill to be passed on the SBP’s autonomy,” Zubair said, adding that this was “dangerous”.
The PML-N spokesperson said that the bill would allow the SBP to escape accountability. He said that would only inform the parliament annually on their policies, while the parliament itself would not be able to call on them,
Zubair said that up until now, the National Economic Council, which was chaired by the prime minister, had set the targets for Pakistan’s inflation and growth rate.
If this participation was done away with and left solely to the SBP, acting on the instructions of the IMF, it would be akin to “handing the keys to Pakistan’s financial freedom to the SBP,” he added.
Zubair pointed out that the bill would also grant blanket immunity to the governors, deputy governors and other personnel of the SBP from agencies such as the FIA and NAB.
“The SBP governor, after the passage of this bill, will be a representative of the IMF like a viceroy which Britain sent in India & Pakistan.” He claimed that the sitting prime minister was aiming to establish a status quo wherein everyone, including current and former public office holders, could be held accountable, and yet had created an exception for members of the SBP.
“If one year from today, the people are screaming […] that there is a lot of inflation, then the finance minister, the prime minister or other ministers will say we do not have any relation with this or concern with inflation,” he said, adding that they would point towards the SBP and its governor — who would be protected against any investigation through the bill and thus untouchable.
Zubair also lambasted the government, saying that for the last two-and-a-half years, it had blamed previous governments and held them responsible for Pakistan’s economic woes and “now for the next two-and-a-half years, when the bill will be passed, they will say that we are not responsible but SBP is according to the law”.
He stated that if the bill is passed, then the SBP would be liable to share information with the IMF, including the confidential information which might previously have been reserved for only the prime minister or finance minister.
He asked why Pakistan was being made to agree to such terms and conditions when other countries that had previously availed IMF programmes had not been compelled to pass such laws.
On the other hand, National Business Group of Federation of Pakistan Chambers of Commerce & Industry (FPCCI) Chairman and Pakistan Businessmen and Intellectuals Forum and All Karachi Industrial Alliance President Mian Zahid Hussain supported the government’s decision to empower the SBP through legislation.
In a statement issued in the federal capital on Wednesday, he said that limiting the government’s role will reduce political interference and it will be able to discharge its duty according to the mandate which will benefit the economy while controlling inflation.
Zahid said that the government should consider the reservations of the stakeholders and try to introduce a proper accountability mechanism in the central bank.
He maintained that serious problems will crop up without the control of elected representatives on the activities of the bank as submitting an annual report in the parliament means nothing.
The government should consider forming a committee comprising politicians and independent economists with powers to judge and fire the SBP chief if needed, the business leader added.
Zahid said that SBP is a national institution and not a private business that should be out of the control of every authority and should be answerable to the parliament.
In case the proposed amendment becomes law, the government will be left with no option but to appoint weak persons violating merit which will cripple the institution, he remarked.
He noted that important economic institutions should be independent but with consensus, while it is a fact that hasty decisions result in remorse.
He said that the decision to amend the SBP Act is also a decision taken in haste to revive IMF’s stalled programme which required thorough debate.
The issue requires a national debate while policies should not be short-term but should be framed for long-term benefits as firefighting will lead the economy to nowhere, he added.
With additional input from INP
