An independent SBP does not suit Pakistan as it is a horrible trap for us and now SBP will be reporting directly to the IMF and FATF as an independent super boss. Unfortunately, we are running Pakistan on a day-to-day basis and we are left at the mercy of IMF and FATF whereas Pakistan is going through multiple external and external crises.
The economic crises, starting from debt servicing and internal debts are growing day by day and the government is changing the drivers but not the economic vehicle which needs to be totally reconditioned as it is unable to stop the collapse of the economy. Circular debt is at its peak and China is annoyed for non-payment to their power dues as per the agreement. Line losses and electricity theft should not be the excuse to not make payments to power plants. It looks like Chinese companies and others will go to international courts sooner or later which could yet be a big diplomatic issue. An independent SBP will further bring objections and the government will be unable to pay in local currency as there is already a budget deficit.
Electricity theft and line losses are administrative matters and they should be handled by the government. We are in trouble today because of the lack of vision in our policies and the government does not thrash out the multiple aspects of fiscal policy. It carries out all the policies based on the directions given by IMF without protecting the national interest and the well-being of the common man.
The IMF wants to push us towards bankruptcy by devaluing our currency and allowing the inflation rate to ensure the price-hike, forcing the public to be on the streets. We should not forget that the west is very upset about our nuclear assets and it will keep hitting us, pushing us towards bankruptcy. It is strange to see that SBP Amendment Bill 2021, which has raised a lot of hue and cry among businessmen at all levels, will have severe negative effects on our economy to give autonomy to the central bank of the country, which means handing the control of the treasury to the chief of State Bank of Pakistan. I think that the blunder of allowing East India Company should not be allowed to be replicated by displaying a rosy picture to the Pakistan business community.
As per the proposed amendment, immunity from any lawsuit or inquiry and investigation by NAB or FIA has been granted to the SBP management including present or former Board of Directors, Governor, Deputy Governors, member of any Board committee and monetary policy committee or the staff of the bank for any illegal act or performance of any functions or any legislation administered by the bank.
Our country cannot afford this level of autonomy and immunity for such a critical institution as it will be detrimental to our economy as well as the sovereignty of our country. Not only this, but the tenure of the governor, deputy governors, external members of the Monetary Policy Committee, and non-executive board members have also been increased from 3 to 5 years with two terms allowed and also one year’s extension.
While the government has justified this autonomy as a way to maintain price, there is no mention of the inflation targets or price stability. In what capacity can the state bank control inflation? Moreover, now the government can pay salaries (though it is bad) by printing currency, whereas, restricting printing currency or loans to our foreign debt-ridden country will come under heavy pressure and we will have to beg for more loans. The government will not be able to borrow from SBP under any circumstances which will badly affect the financial needs of the government and national exchequer and this will create hardships for the government, pushing us to bankruptcy. The entire business community is showing serious objections and reservations on these amendments as the SBP will not finance any rural credit, industrial credit, export credit, loans guarantees, and housing credit which means these sectors will get into great trouble, and mafia with cash will flourish at the cost of the common man and the small business community.
An independent SBP will be dictating all our institutional and state secrets, and operations in the national interest will be directly subject to security. State Bank will be under legal ambit to supply the information as already committed to the international community via FATF. The bill excludes any government representation in the State Bank Board of Directors as no member of parliament or any state institution will be allowed to become a part of SBP or even allied to question its irregularities in the Parliament or any court.
According to the new bill, monetary policy is the exclusive domain of the State Bank while fiscal policies will be under the Federal Government which will severely compromise and damage the macroeconomic management of the country as there will be no coordination or coherence between both domains as these amendments are contradictory and are being brought in with ulterior motives to push the country to bankruptcy.
The President, PM, and the treasury benches must not allow the implementation of these imported ideas duly directed by the IMF as it will make our nation BOUND permanently. Hence, we must say no to an independent SBP.
The Article was published in The Nation on April 1, 2021, Link to the article is https://nation.com.pk/01-Apr-2021/imf-a-new-boss-in-the-making
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