Bill to end political involvement in central bank: minister

Published January 16, 2022
Minister for Energy Hammad Azhar addresses a news conference in Islamabad on Saturday. — DawnNewsTV
Minister for Energy Hammad Azhar addresses a news conference in Islamabad on Saturday. — DawnNewsTV

ISLAMABAD: The present government has introduced “historic reforms” in different sectors, including energy, during the last three years aimed at ensuring sustainable development, Minister for Energy Hammad Azhar said on Saturday.

Addressing a news conference, he stressed that the State Bank of Pakistan (SBP) Amendment Bill was essential in the wake of “politically motivated damage done to the economy by the finance minister of the last government”.

He said the SBP bill would free the central bank from politicised decisions. “The autonomy of the State Bank is very important and the regular boom and bust cycle in Pakistan has strong links with the central bank’s autonomy,” he said. All stable economies had autonomous central banks, he said and alleged that one former deputy governor was involved in money laundering for the former finance minister.

Without naming names, he pointed towards the finance minister of the former government Senator Ishaq Dar and said: “There was a time that the finance minister would make a call to the State Bank governor and give directions regarding the exchange rate. The SBP governor would then use the loaned dollars to execute the directives given by the finance minister to maintain the exchange rates artificially.”

Says reforms introduced in various sectors during last three years

Besides, the foreign exchange reserves continued to decline, the country was flooded with imports and foreign debt kept mounting, he said.

“Now we have market-based exchange rates and the reserves are not used to maintain the exchange rate artificially,” Mr Azhar said, adding that the exports were being made competitive.

He rejected the impression that an autonomous central bank posed a risk to national security and pointed out that the SBP’s governor, deputy governor and the board of directors would be appointed by the government.

He added that there was no need to give a political colour to the bill granting autonomy to the State Bank and said that even the PML-N tried to present such a bill in 2015 but did not follow it themselves.

Mr Azhar said Pakistan had not been performing well in terms of the Financial Action Task Force (FATF) compliance, and the country had been on the financial watchdog’s black and grey lists several times. However, the reforms taken by the present government had been acknowledged by the world and 26 out of the 27 reform agendas had been achieved by the government in a record time, he added.

On gas shortage, he said discussions were under way with Russian officials to bring a gas pipeline via Kazakhstan, which was expected to be cheaper than the imported LNG.

“We are working for substitutes, as the local [gas] reserves are depleting,” he said while addressing a news conference on Saturday. “Laws are being made to mix imported LNG and imported gas with locally produced natural gas for supply to the domestic consumers in the country.”

He also highlighted other reforms taken by the government, including the separation of customs from the Federal Board of Revenue and tax policy, which he said had resulted in the imports of cheap raw material.

“Earlier, the customs policies were used to enhance tax revenues but it resulted in de-industrialisation,” the minister said, adding: “Now since the Ministry of Commerce will drive the customs policy, around Rs200bn worth of input has been made to zero rate which has resulted in strong growth of industrialisation and the large-scale manufacturing grew 12 per cent in the last fiscal year, exports have increased and de-industrialisation has been reversed.”

These measures had helped stabilise the economy, the minister said and expressed confidence that the country’s exports would touch $30 billion in the ongoing fiscal year.

“Our tax collection and exports are increasing as a result of better policies, we target to collect Rs6 trillion in taxes during the current fiscal year while our GDP growth will be 5pc and remittances will be $30bn,” the energy minister said.

He said the government was focusing on improving transparency in electricity generation as well as the transmission system.

“The previous governments made decisions on the take-or-pay basis giving enormous risk-free benefits to investors of their choice,” Mr Azhar said. “But now we have introduced transparency in the whole affair through a competitive open-auction system.”

He also highlighted that the government had smashed all the cartels in the agriculture sector and the farm economy was strong and the result was visible in the high off-take of urea.

Published in Dawn, January 16th, 2022

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