KARACHI: State institutions should find correlations of social implications of all policies of the country’s central bank, particularly the monetary policy, which will enhance its importance in socio-economic dimensions and influence over the graph of poverty and development at a national level.
This was discussed by speakers at a roundtable organized by Sustainable Development Policy Institute (SDPI) at a local hotel on the topic of Understanding Social Implications of Monetary Policy in Pakistan.
Dr. Safia Minhaj, Assistant Professor, University of Karachi, said the monetary policy in Pakistan creates inequality between the rich class and poor which should be examined and assessed in a long-run. She was of the view the lending in Pakistan is accessible to rich class as the commercial banks do financing to the businesses having collateral and assets to show, hence the informal lending has been on the rise particularly in the commercial capital of Pakistan, Karachi.
Dr Sajid Amin Javed, Research Fellow at SDPI, said the monetary policy should be treated as the public policy which equally relevant and important for masses as similar to managers and businesses.
The purpose to highlight the issue into mainstream is not to criticize the function of the SBP but to strengthen its status and scope of work, which should be broader than the present role, ideally, whereas the institution should be held accountable on its core functions of inflation and foreign exchange stability.
Inclusiveness and better coordination between policy stakeholders is essential for effective design, development, implementation, and monitoring and evaluation of monetary policy resulting in balanced economic growth and social development in Pakistan implied in controlled inflation and price stability, he added.
Engr Abdul Jabbar Memon, Board Member, SDPI, said the government should engage the state bank in coming up with a framework like other east countries have adopted to overcome any crisis.
He pointed out that the debate on social implications of monetary policy has been completely missing in Pakistan, so far as this is the first initiative. Monetary policy decisions and actions have social implications as these steps are directly linked to inequality, climate action and poverty.
Speakers stressed upon the broader policies rather than just monetary policy while assessing social and welfare implications. This includes supporting inclusive development, promoting social-oriented financing strategies, and strengthening the financial well-being of people. It is needed to revisit the welfare metric and macroeconomic modelling to evaluate the performance of monetary/central bank policies, they said.
Copyright Business Recorder, 2021
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