ISLAMABAD: Minister for Finance Shaukat Tarin said on Monday that the previous government of Pakistan Muslim League-Nawaz (PMLN) kept the dollar at Rs94 artificially, which cost Pakistan $60 billion.
He expressed these views during a meeting of the National Assembly Standing Committee on Finance. In the meeting, Ahsan Iqbal interrupted and objected to Tarin’s tone, while saying that the minister could not speak in such a manner. He asked if exports increased by reducing the value of local currency by 40 percent.
The National Assembly Standing Committee on Finance cleared the State Bank of Pakistan (SBP) Amendment Bill 2021 with three major changes including making an addition for barring dual nationals to serve as governor and two years conditions for not serving for other international financial institutions.
The NA panel also brought the third amendment to the proposed controversial bill that governor and other SBP officials would appear before Parliament whenever required. The NA panel held its meeting under Chairmanship Faiz Ullah here at the Parliament House and cleared the SBP amendment bill after incorporating certain changes in it.
The PML-N Leader Ahsan Iqbal proposed that the SBP governor should have one-term of five years and it should not be extendable. It was agreed by Minister for Finance Shaukat Tarin during the meeting, however, the NA panel chairman did not include the proposal in the final version.
Shaukat Tarin agreed to amend the clause on term of office of five years as non-extendible for the SBP governor and later told media persons that the matter would be raised before the International Monetary Fund (IMF), however, Committee Chairman Faiz Ullah later on did not include the clause in the final recommendations.
Shaukat Tarin conceded that there was agreement with the IMF on SBP Bill 2021 which was also seen by the Fund’s Executive Board on the occasion of approving $500 million additional tranche in March 2021. He was of the view that the existing bill was different from the last one because they told the IMF that they could not make constitutional violations.
At one occasion, Finance Minister Shaukat Tarin and Ahsan Iqbal exchanged hot words and Ahsan Iqbal stated that they were not here to listen to harsh tone of finance minister.
SBP Governor Dr Reza Baqir told the committee that he is not dual national and before joining as SBP Governor he had tendered resignation from the IMF. He said that he is Pakistani national.
He said a wrong perception was being built that the government had sold the State Bank to the IMF. “Now the document is available to everyone, the government’s powers have not been curtailed.”
Baqir asked the committee whether it was wrong to be a former employee of the IMF. “Several SBP governors have been employees of the IMF and other financial institutions.” “I have no other nationality, I am a Pakistan.”
Shaukat Tarin said that the government will still “retain control” over the central bank even after the passage of the SBP Amendment Act. The SBP will not be completely autonomous, he added. The government will nominate the eight members for the SBP’s board of directors and approve their appointment. He said that IMF asked the government to stop borrowing from the SBP as it was misused in the past. A central bank enjoys complete autonomy around the world but the SBP was relegated to a money printing machine which also resulted in inflation. The incumbent government has not borrowed from the central bank however, the earlier loans amount touched Rs7,000 billion, he added.
The parliamentarians belonging to opposition benches asked the committee chairman to discuss the bill clause by clause as every member will have suggestions, proposals and amendments, but he turned down the proposal and said that they could give their suggestions on any clause they want.
Ahsan Iqbal raised several objections to the SBP amendment bill and stated that there are many clauses, which need to be amended. He said that dual citizenship clause must be included that the SBP governor cannot have dual citizenship.
He further said that, according to the proposed bill, the SBP governor gets five-year term and then another five-year extension.
The current governor has three years tenure and asked if he would spend 13 years.
He further said that as per the proposed law, the SBP governor and other officials could determine their own salary. He asked to give the same privileges to other officers of the finance ministry. The SBP governor should be bound for two years, so that he could not join any other institution, Iqbal added. He also proposed that the deputy chairman planning should also be included in the board.
Ahsan Iqbal further objected to the clause, which says that the Bank shall be consulted prior to the introduction of any bill by the federal government in Parliament, which may have a bearing on the functions of the bank. He said that the word “prior” should be omitted and as a stakeholder, the bank should be consulted on such legislation.
MNA Qaiser Sheikh said if the government borrows from commercial banks, businesses would affect. MNA Maulana Abdul Wasi rejected the bill, while saying that other members sitting here had objections but could not speak due to party affiliation. Ahsan Iqbal said that he would give his objections to the bill in writing.
Addressing the opposition lawmakers’ concerns, the finance minister said the government would appoint a board of governors of the SBP that will work under the oversight of Parliament. He said the central bank would not have powers to take decisions unilaterally and will be controlled by a board of governors to be appointed by the government.
All objections to the previous bill granting the SBP autonomy have been addressed, he said. PPP MNA Nafeesa Shah said that price stability and growth have been omitted from the preamble of the bill. Further, the accountability oversight has been weakened in the proposed bill as the number or reports to the parliament has been decreased.
The governor said that as per the proposed preamble, inflation and growth are included which stated that it is necessary to provide for the constitution of SBP to archive domestic price stability by way of regulating the monetary and credit system of Pakistan and without prejudice to said primary objective, contribute to the stability of the financial system and supporting the general economic policies of the federal government to foster development and fuller utilization of productive resources.
The committee was informed that new section 4C proposed specify the function of the SBP, which include determining and implementing monetary policy, formulating and implementing exchange rate policy, carrying out and disseminating research relevant to the Bank’s objectives and function etc.
Meanwhile, the Senate Standing Committee on Finance and Revenues has rejected several proposals of Finance Amendment Bill 2021. Now the Senate Panel is expected to finalize its proposals and referred back to Senate for approving recommendations on Tax Laws Supplementary Bill after which it will be forwarded to National Assembly.
Federal Minister for Finance Shaukat Tarin informed the Senate panel that the IMF’s Executive Board would meet on January 28 or January 31, 2022 for considering completion of sixth review for Pakistan under $6 billion Extended Fund Facility (EFF). He said that he had asked the IMF for changing review date and informed the IMF that there would be no more discussion on it because our parliament is not robber stamp.
The Senate panel has opposed withdrawal of GST exemption and imposition of 17 percent tax on bakeries, restaurants and food chains made bread, Nan, Roti while rejected doubling of Advance Tax on 1000cc and imposition of 12.5 percent Sales Tax on vehicles. The Senate panel also rejected the proposal to impose 17 percent GST on locally manufactured mobiles and recommended imposing GST at the standard rate of 17 percent on the import of mobile phone sets. The Committee also rejected jacking up withholding tax from 10 to 15 percent. The Senate panel granted its nod for withdrawal of GST exemption on sixth schedule items such as medical equipment, de-salination plants. The committee rejected the withdrawal of GST exemption on imported seed and other products.