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ISLAMABAD: Finance Minister, Dr Abdul Hafeez Shaikh is said to have been asked by some of his Cabinet colleagues to tell them whether or not it was absolutely necessary to accept all conditions of the International Monetary Fund (IMF), well informed sources told Business Recorder.

These reservations were expressed at the last meeting of cabinet held on March 9, 2021 with Prime Minister in the chair, when the summary of ‘The State Bank of Pakistan (Amendment) Bill, 2021’ came under consideration.

The Finance Division briefed the Cabinet that the State Bank of Pakistan (SBP) is incorporated under the State Bank of Pakistan Act, 1956, which gives the Bank the authority to function as the Central Bank of the country.

The SBP Act mandates the Bank to regulate the monetary and credit system of Pakistan, and to foster growth in the best national interest with a view to securing monetary stability and further utilization of the country's productive resources.

The SBP Act Amendment Bill was drafted and forwarded by SBP to the Ministry of Finance (MoF) on March 11, 2020. The MoF introduced certain changes and moved a summary for the Cabinet Committee for Disposal of Legislative Cases (CCLC). The Bill was very briefly considered by the CCLC on April 5, 2020.

Subsequently, the CCLC conveyed its decision which is as follows: "The CCLC deferred the consideration of the Summary titled State Bank of Pakistan (Amendment) Bill, 2020 of March 27, 2020 submitted by Finance Division with the direction that after requisite deliberation a compromised [sic] draft may be submitted to CCLC on or before 10th April, 2020 for its consideration".

Accordingly, a reconciled draft of the Bill was prepared jointly by MoF and SBP and shared with the Law and Justice Division for legal vetting.

Submission of the amendments in the SBP Act, 1956 to the Parliament constitutes a 'Prior Action' under the IMF Programme 2019- 22 for the upcoming Board meeting of the Fund, which needed to be completed without any delay. However, it was informed that the CCLC might not be able to meet during the next fourteen days. Finance Division, therefore, sought the approval of the Cabinet to: (i) waive, in consideration of the urgency, the condition of submitting the draft 'State Bank of Pakistan (Amendment) Bill, 2021' to the CCLC; and (ii) approve the Bill for introduction in the Parliament in terms or Rule 16(l)(a), read with Rule 27, of the Rules of Business, 1973.

During a discussion, some of the members complained that the summary was received only the night before. Minister for Finance, highlighting the urgency, pledged that any reservations on the Bill would be addressed during its processing in the Parliament.

"Few of the members also observed that not all the conditions of the IMF had to be accepted and sought clarifications whether the Finance Division had succeeded in getting any IMF conditions dropped or relaxed in favour of Pakistan during the negotiations," the sources added.

Minister for Finance assured that the Bill seeks to provide more independence to SBP, in line with the international best practices. Further, the SBP was being mandated to focus on curbing the inflation, which internationally is the primary responsibility of central banks.

Finance Ministry, which presented the summary, has also not shared the IMF instrument with the Cabinet Committee on Disposal of Legislative Cases (CCLC) which wants to go through the documents prior to approval of amendments in the Ogra Ordinance.

On January 21, 2021, the Cabinet Division informed CCLC that it requested Finance Division multiple times, at appropriate levels, to address the CCLC observations, and furnish the legal instrument relating to the said IMF benchmark. However, this has not been shared.

The CCLC headed by the Law Minister, Dr Faroogh Naseem, has shown reluctance to clear IMF's "desired" amendments in the Ogra Ordinance, saying that it will deprive the government of the power to freeze or partially pass on gas price rise on to the consumers.

Copyright Business Recorder, 2021


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