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The government has passed the SBP Amendment Bill in the Senate with a one-vote majority after the opposition gained a numerical lead. There were 43 votes in favor of the bill and 42 against. At the time of passage of the bill, eight members of the opposition, including Leader of the Opposition Yousuf Gilani, and four members of the government were absent from the house.
The opposition says that the government is taking away the autonomy of SBP. However, if we look at the main points of the bill, then under the SBP Bill 2021, the government will be banned from taking loans from SBP. The authorized treasury of the SBP will be Rs.500 billion and the paid-up capital will be Rs.100 billion. The paid-up capital cannot be reduced. The main objective of SBP will be to stabilize local prices, determine monetary policy, and implement it.
The central bank will formulate an exchange rate policy, hold all of Pakistan’s international reserves and issue currency. The Board of Directors will consist of one Governor and eight Non-Executive Directors. The Non-Executive Directors will have at least one member from each province.
The Federal Secretary shall be a member of the Board of Finance but shall not have the power to vote. The Deputy Governor shall attend the meetings of the Board but shall not have the right to vote. In the absence of the governor, the Deputy Governor shall preside over the meeting and exercise his voting right. The governor will be the chairperson of the SBP Board.
The SBP will not provide direct loans or guarantees to the government, government departments, or public institutions. The SBP will not purchase any securities issued by the government, nor will it guarantee any loan or investment entered by the SBP government. The governor and non-executive directors will be appointed by the president on the recommendation of the federal government. The SBP will have three deputy governors and they will be appointed by the federal government after consultation with the finance minister and the governor.
It is pertinent to note here that the IMF had given five preconditions to Pakistan for the approval of the Sixth Review, including the Finance Supplementary Bill 2021 and the SBP Amendment Bill 2021 relating to the sovereignty of the State Bank of Pakistan.
According to the Jang newspaper, the government has fulfilled all the preconditions for the next installment of IMF after the approval of the SBP Amendment Bill by the Senate, and now there is a strong possibility that on February 2, the Executive Board of the IMF will approve the sixth review, after which Pakistan will not only receive an installment of 1.5 billion but also restore the 6 billion loan program with the IMF.
Governor SBP Dr. Baqir Raza says that the wrong impression is being given that SBP will not be under the control of the government while Federal Minister for Finance Shaukat Tareen said that if you look at the central banks of good countries then there is sovereignty. He said that we will make the SBP more administratively empowered and will end its sovereignty if the SBP tries to get out of hand.
It is true that there is an urgent need for reform in the system of Pakistan. However, if these reforms are in the interest of the country then there is no problem. The government should address the concerns of the opposition parties regarding the SBP reforms so as to reduce the atmosphere of political tension.
