The Federal Cabinet has approved the State Bank of Pakistan Amendment Bill 2021. The bill includes a number of options to improve the SBP’s duties, responsibilities, performance, and transparency. According to the approved bill, the State Bank of Pakistan will work towards controlling prices and inflation. Finance Minister Dr. Abdul Hafeez Sheikh said that the main purpose of this bill is to determine the mandate of the SBP. The State Bank of Pakistan will now be accountable to Parliament. Under the Amendment Bill: the State Bank of Pakistan will have a newly empowered Board of Directors.
The term of appointment of Governor and Deputy Governor of State Bank of Pakistan has been extended from 3 years to 5 years. More than 140 billion tax concessions will be abolished in 80 departments. NAB and FIA cannot investigate outgoing and current governors, deputy governors, and board members. In policy and administration, governmental influence on the State Bank of Pakistan will be completely eliminated.
The biggest problems facing the PTI government are related to finance and the economy. Lack of financial transparency has undermined the performance of previous governments.
When the PTI government entered into a $6 billion bailout package deal with the IMF, Pakistan had to agree to keep the State Bank of Pakistan and its head free from government influence. Pakistan also acknowledged that there would be no government intervention to keep the rupee stable against the dollar, but the prices of the dollar will be as per market rate.
The State Bank of Pakistan is responsible for implementing a number of FATF recommendations. Some quarters have expressed the view that the State Bank of Pakistan Amendment Bill is being brought in at the behest of the FATF and the IMF. Hence it is feared that the international financial institutions will benefit more from these amendments than Pakistan.
The bill under discussion has two key points. First making the State Bank of Pakistan answerable to Parliament is a major step towards the supremacy of democracy. It is the financial control and supervision that strengthens an official or institution in today’s world. The second is to empower the State Bank of Pakistan to control inflation.