ISLAMABAD, July 10: The federal cabinet on Wednesday agreed, in principle, to withdraw the proposed amendment that empowers the president to nominate the prime minister.

A cabinet meeting, presided over by President Gen Pervez Musharraf, also agreed to make the State Bank a “constitutional body” to ensure that there is no freezing of foreign exchange accounts in future, informed sources told Dawn.

Referring to the proposed constitutional amendments, many cabinet members said the government should avoid introducing those amendments which were being opposed by various segments of society.

The president told the meeting that he had no plans to encroach upon the prime minister’s powers through the proposed amendments. “But there will certainly be checks and balances,” he was quoted as having said.

A participant asked why the president should take any blame for nominating the prime minister, and suggested that the matter should be left to be decided by the future assembly.

Another member of the cabinet wanted to know what would happen if a hung parliament emerged as a result of the forthcoming October polls and said that the president should have the powers to nominate the prime minister.

The cabinet, however, agreed that the proposed amendment about the prime minister by the president should be withdrawn to avoid public criticism.

The president said it was good that people from all walks of life were expressing their views on the proposed constitutional package, which, he added, would help create consensus in the masses.

The president said he would finally be taking the matter to a joint sitting of the cabinet and the National Security Council to decide it.

The meeting also discussed financial matters and agreed that the State Bank, which is currently a statuary body, should be made a constitutional body so that no future government could freeze foreign private accounts.

The meeting was told that if the central bank were a constitutional body in 1998, the then PML government could not have passed an executive order to freeze the foreign accounts that largely shattered the confidence of the investors.

The cabinet decided to end the “financial dependence” of the provinces by curtailing the Centre’s role in dealing with day-to-day matters. The meeting was told that the second fiscal package being finalized by the National Reconstruction Bureau would take care of the issue.

The president said that the provinces needed to be given real financial autonomy with a view to removing inter-provincial disharmony.

The president said he would start consultations with the politicians, intelligentsia and media representatives after July 12 and take the nation into confidence on various important national issues, including the constitutional amendments proposals.

He expressed satisfaction that the debate initiated on the proposed amendments were generating valuable inputs as things were turning for the better and were becoming clearer. The situation, he added, would get even better with the unfolding of the second package later this week.