PML-N leader and spokesman for party supremo Nawaz Sharif, Mohammad Zubair, on Wednesday expressed the PML-N's reservations over the proposed bill to grant unprecedented autonomy to the State Bank of Pakistan (SBP) in line with the terms of the International Monetary Fund (IMF), saying his party would not allow it to be passed.
The bill was cleared in a meeting of the federal cabinet on March 9 and was aimed at providing greater autonomy to the central bank over price control and fighting inflation by adopting exchange rate and monetary policy in an autonomous manner without the government’s interventions.
"We want to say that we will not let this bill be allowed and there are reasons for this," said Zubair while addressing a press conference in Karachi.
"On behalf of our party we have a lot of reservations and this is equal to snatching Pakistan's freedom. The SBP will now have even less powers than the central bank of India before 1947."
Zubair said the PML-N had no reservations on the SBP being an independent institution but did have reservations over the fact that the bill was being brought at the behest of the IMF.
"The IMF and World Bank have been trying since quite some for a bill to be passed on the SBP's autonomy," Zubair said, adding that this was "dangerous" .
He decried that after the passing of the bill, the prime minister, the government, the finance minister and the Parliament would lose any and all control over the SBP.
"The SBP and its governor will decide what should be Pakistan's economic policy" after the bill's passage, Zubair said.
"They [SBP personnel] will be not answerable for anything, they will only inform the Parliament which won't be able to call on them. They will inform annually about what their policies will be and no one will be able to ask them who is responsible for these policies."
Zubair said up until now, the National Economic Council, which was chaired by the prime minister, had set the targets for Pakistan's inflation and growth rate.
If this participation was done away with and left solely to the SBP, acting on the instructions of the IMF, it would be akin to "handing the keys to Pakistan's financial freedom to the SBP", he said.
Immunity for SBP
He further said that under the new bill, all related SBP personnel such as the governor, deputy governors and executives — including former office holders — were immune to any investigations from the Federal Investigation Agency (FIA) and the National Accountability Bureau (NAB).
Zubair said this was a particular point of contention for the PML-N since the prime minister wanted to establish "supremacy of law" in the country in which everyone from the prime minister to former prime ministers and non-office holders could be summoned by NAB, but not SBP personnel.
"The SBP governor, after passage of this bill, will be a representative of the IMF like a viceroy which Britain sent in India & Pakistan."
Zubair argued that granting this sort of immunity to the SBP while giving it the authority to make important economic decisions would also serve to absolve the government of any responsibility and accountability in the fallout of these economic decisions.
"If one year from today, the people are screaming [...] that there is a lot of inflation, then the finance minister, the prime minister or other ministers will say we don't have any relation with this or concern with inflation," he said, adding that they would point towards the SBP and its governor — who would be protected against any investigation through the bill and thus untouchable.
"Responsibility without accountability is nothing," he stressed.
Zubair also blasted the government, saying that for the last two-and-a-half years, it had blamed previous governments and held them responsible for Pakistan's economic woes and "now for the next two-and-a-half years, when the bill will be passed, they'll say that we're not responsible but SBP is according to the law."
He also noted with concern that under the new bill, the SBP would be liable to provide the IMF, World Bank and other institutions with "all the information related to the economy whether that is secret or confidential".
"There is a lot of information that doesn't even come in front of the cabinet. It is shared with only a few people like the prime minister, finance minister, planning minister and few others," said Zubair, adding that now the SBP wouldn't even be able to make the excuse that the information was limited to some eyes only and thus couldn't be shared.
He asked why Pakistan was being made to agree to such terms and conditions when other countries that had previously availed IMF programmes hadn't been compelled to pass such laws.
"At this time the two most important positions with regards to our economy, of the finance minister and SBP governor are [filled with] people from the IMF and the World Bank."
"If this govt can't work or take responsibility and accountability of its decisions then they should leave," said Zubair, adding that this couldn't happen that the government railed against previous governments and then handed over responsibility to another institution when it couldn't govern.
SBP amendment bill
Finance Minister Abdul Hafeez Shaikh had elaborated upon the details of the bill for amendments in the SBP in a press conference on March 9.
Besides the aforementioned greater autonomy, he had said it would also provide a five-year guaranteed term to the SBP governor instead of the existing three years and surrender the government’s right to borrow from the central bank so it could instead adopt measures to meet its financial requirements through its own resources.
Additionally, the Monetary Policy and Fiscal Coordination Board would also be abolished and the federal government would coordinate with the central bank through various committees.
The governor, board of directors or deputy governor and members of the monetary policy, officers and employees of the SBP would be protected against any suit, prosecution or any other legal proceeding, including for damages “for any act of commission or omission done in exercise or performance of any functions, power or duty”.
They would also not be liable in their personal capacity for any act of commission or omission done in their official capacity in good faith and they would also be exempted from legal action initiated by the NAB and the FIA.