ISLAMABAD: Ashraf Mahmood Wathra, the governor in-waiting of the State Bank of Pakistan (SBP), has confirmed that the International Monetary Fund (IMF) has expressed its dissatisfaction with the extent of autonomy proposed for the central bank.

Responding to senators’ questions at a meeting of the Senate Standing Committee on Finance and Revenue, Mr Wathra said the IMF’s basic concept on independence of the central bank discussed initially “had been incorporated in the SBP (Amendment) Bill, 2014, but they (IMF officials) are not satisfied”.

He said the IMF had now made some additional demands which would be discussed in detail during the course of third review talks to be held in Dubai in the first week of May.

Another official said that the still unresolved issue between the IMF and the government on the issue was about the focus of monetary policy. The IMF wanted a European model for the SBP with the monetary policy focussed on addressing price stability in the market, rather than on economic growth generally preferred by political governments.

Senators generally supported full independence for the central bank but noted that SBP’s complete autonomy would be useless if the governor belonged to the government or followed its line of action.

But Salim Mandviwalla, finance minister in a former PPP government, disagreed and said that acceptance by the government of everything relating to the SBP would not be in national interest.

When asked by journalists whether it was within the domain of the finance minister or of the SBP to suggest the dollar-rupee parity as was repeatedly speculated by Finance Minister Ishaq Dar in recent past, Mr Wathra said that on many issues various state organs cooperated with each other.

When asked about the legal position on the exchange rate jurisdiction under the existing SBP law in the context of central bank’s autonomy and whether a finance minister should speak on a subject which was within the central bank’s domain, a cautious governor in-waiting said these questions should not be raised at this moment.

He also said that in national interest the media should not raise such questions or write that he was being tipped as SBP governor.

Responding to a question about likely reduction in policy discount rate, Mr Wathra said the monetary policy was determined through a process based on economic data and a decision was taken by the central board of the SBP on the day of its meeting and that the central bank or its governor could not determine the policy. He said that announcement of the next monetary policy was due by mid-May.

During the committee meeting presided over by Senator Nasrin Jalil of Muttahida Qaumi Movement, some senators challenged the government’s claim that the Federal Board of Revenue (FBR) had collected Rs1.574 billion revenue in the first nine months of the fiscal year, showing an increase of 15.4 per cent.

Ilyas Bilour of Awami National Party accused the government of withholding Rs450 billion sales tax refund to business community. “In fact, the revenue collection this year has been 16.8 per cent lower than the last year’s because this amount of Rs450 billion does not belong to the FBR but the business community”, he asserted.

Senators Haji Adeel and Humayun Khan Mandokhel claimed that the government had banned sales tax refunds to show higher revenue collection.

Mr Bilour said he had seen specific instructions given to regional tax offices not to clear refunds of more than Rs500,000 and alleged that he himself had not been paid a single penny in sales tax refund since the start of the fiscal year.

The secretary finance and the chief sales tax of FBR denied that there was a ban on the refunds but they did not have any data to support the denial.

Haji Adeel said field offices had written letters seeking policy direction from the federal government and the FBR headquarters on refunds but there had been a complete silence from the federal government.

Most senators alleged that unprecedented dictates had been given by the IMF to the government under the ongoing fund programme.

Senator Sughra Imam of PPP said it was for the first time that the IMF had dictated terms of trade and guidelines for bilateral relations with other countries, including the granting of the Most Favoured Nation (MFN) status to India which was a foreign policy issue between the two countries.

Secretary Finance Dr Waqar Masood said the issue of MFN status for India was part of a memorandum on economic policies provided by the government to the IMF on the basis of a cabinet decision taken by the previous government.