The recent move by the government to make the State Bank of Pakistan (SBP) autonomous is part of the International Monetary Fund (IMF) agenda being imposed on the country as the decision lacks transparency and goes against national interest.
This was the unanimous view of economic and fiscal policy experts during a webinar titled ‘Understanding State Bank Amendment Bill 2021’ organised by the Institute of Policy Studies (IPS).
Commenting on the proposed amendments, Dr Pervez Tahir, former chief economist, Planning Commission, lamented the removal of the word ‘national interest’ from the preamble of the existing SBP Act and argued that the proposed bill would delineate responsibility for controlling inflation to the SBP which has already failed in this regard.
He further said controlling prices of food items is a provincial subject and has nothing to do with the SBP which can only control core inflation that has not increased substantially in recent years. He was also of the view that the government is giving much more than what the IMF or World Bank could actually demand from a sovereign state through the proposed amendment.
Dr Shahida Wizarat, Dean of College of Economics and Social Development, Institute of Business Management Karachi, was of the view that independence of institutions can only be achieved through holistic policies. She rued that Pakistan’s policies are not indigenous, rather dictated, as most of the officials running important institutions are “imported” which underlines the continuation of colonial era in this part of the world. Giving absolute autonomy to the SBP, she further said, is tantamount to making Pakistan subservient to the IMF and the World Bank.
Explaining the phenomenon of independence of central banks, Qanit Khalil, a chartered accountant and economic policy analyst, termed the proposed autonomy to the SBP in line with the global trend. However, he argued independence does not guarantee price stability and economic growth of a country as proven by many studies.
Dr Abdul Saboor, Dean of Social Sciences Department at PMAS Arid Agriculture University Rawalpindi, opined that autonomy of the SBP hinges on the progress of all the other institutions. However, this progress will remain a pipe dream unless the government introduces governance reforms. He said that state institutions will never strengthen unless the country develops on all economic fronts.
He accentuated the need for developing a counter mechanism so that foreign institutions are not able to exploit the weaknesses of the country’s institutions.
Concluding the session, IPS Chairman Khalid Rahman said the initiative, prima facie, is an imposed one, which reflects the approach being taken in this regard since the former prime minister Moeen Qureshi’s tenure.
He believed that some government officials have moved the bill with mala fide intentions to either turn the SBP into a subordinate institution of the IMF or pose themselves as more loyal to the IMF than the country. He stressed the need for ensuring transparency in the whole affair as its absence is giving rise to extraordinary speculations which are detrimental to national interest.
