It must have been uncomfortable for State Bank Governor Ashraf Mahmood Wathra to announce the monetary policy statement on Saturday.

A few hours earlier, the finance minister had already stolen his thunder by telling the world that the policy discount rate has been revised downward by a whole percentage point, even before the State Bank had made its announcement.

Read: SBP slashes interest rates to 10 year low

The clarification issued later by the finance ministry sounded more like a hastily arranged affair, trying to convince us that the finance minister “was unaware of the exact timing” of the governor’s news conference. The point is that Finance Minister Ishaq Dar had absolutely no business announcing the interest rate reduction as some sort of victory.

And if that was not the intention behind his slip of the tongue, then why even bring up interest rates in a presser that was largely about a judicial commission? The clear impression here is that he was telling the business community that this reduction in the cost of borrowing was something they owed to him.

To top it all, the picture that was painted in the unusually long and convoluted statement accompanying the decision is not nearly as rosy as the authors would like us to believe.

Also read: SBP reduces monetary policy rate to 9.5 per cent

For instance, we are told that the government has retired almost Rs450bn of borrowing from the State Bank in the first half of the fiscal year, but the amount it has borrowed from bank and non-bank sources is beyond Rs1tr. What is this if not simply a shift in the base of borrowing away from one source towards another? In the fiscal domain, revenue slowdowns appear to be papered over.

Quarter two data is not presented, except in one line to simply say “42 percent growth would be required in H2-FY15 to meet the budget target of Rs2810 billion”. Everyone knows that 42pc growth in revenues is not about to happen, but the State Bank still prefers to talk about an ongoing “fiscal consolidation”.

It is not very encouraging to see the overbearing eagerness of the finance ministry to announce a rate cut, but it is even more distressing to note how the bank is searching for ways to put a smile on an otherwise considerably dour state affairs, as regards public debt and fiscal affairs. The State Bank of Pakistan is an autonomous institution under the law, and it should be treated and behave accordingly.

Published in Dawn, January 27th, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play