By Afshain Afzal

The State Bank of Pakistan (SBP) is no longer a State Bank but has become a Central Bank under the tough-conditionalities of International Monetary Fund (IMF). They claim it was necessary to free State Bank from any political and state pressures. The unlimited powers held with Governor State Bank will be dangerous and far reaching but why someone should bother at this stage. In return, the State Bank of Pakistan is going to receive a $6 billion loan from International Monetary Fund to introduce reforms in the shape of of new legislation that will maintain price stability in the central bank’s primary mandate. Now the new Central Bank is free from the clutches of Ministry of Finance, Government of Pakistan. Governor and his team at Central Bank has de-facto powers, just waiting for an approval from Parliament. Under the new law, the governor, board of directors or deputy governor and members of the monetary policy, officers and employees of the SBP would be protected against legal actions and would also be exempted from inquiries by the National Accountability Bureau (NAB) and Federal Investigation Agency (FIA), unless the SBP board’s gives approval to initiate proceedings. One wonders when State Bank of Pakistan will be accountable to the parliament, how political pressure can be avoided.

Very interestingly, the International Monetary Fund has shared a draft of the Memorandum of Financial and Economic Policies (MEFP) with the Pakistani authorities and placed approval of the State Bank of Pakistan’s amendment act 2021 from parliament as part of condition for the completion of the sixth review under the $6 billion Extended Fund Facility (EFF) programme. It is part of IMF programme that the gas tariff with increased with effect from 1st July 2021 while the power tariff will further be increased in the months to come. More so, under the international pressure, the Government is bent upon to accelerate privatization programme and privatize certain strategic state-owned entities. Interestingly, Tax Reform Amendment Bill 2021 will abolish 80 corporate income tax exemptions. But proposal for General Sales Tax (GST) in Tax Reform Bill 2021 has been excluded. Now the GST exemptions would be withdrawn in the coming budget through the Finance Bill 2021. In the name of privatization of tourist sites and hotels and strategic assets like communications are being handed over to foreign companies without conditionality.

One important point to be noticed that there is no independent regulatory authority to monitor State Bank or other national or foreign banks and why all the powers have been bestowed to Governor State bank and its team is beyond comprehension. It is high time that Finance Ministry must open its eyes and stop the conspiracy against the State of Pakistan. There should be some common sence as all-out autonomy cannot be granted to State Bank of Pakistan after parting its way from the Finance Ministry. IMF’s Resident Chief in Pakistan Teresa Daban Sanchez need to be approached to find out what world economic powers have planned for Pakistan as a semi-slave state under the international banking regime so that Pakistani are prepared for the worse.