SBP autonomy issue stretches ambiguity over IMF programme

Final meeting on central bank bill issue expected to take place soon, report claims

The second round of dialogue between Law Minister Dr Farogh Naseem and International Monetary Fund mission chief for Pakistan Ernesto Ramirez Rigo for the revival of its $6 billion Extended Fund Facility (EFF) ended without the two sides being able to agree on the a new consensus draft of the State Bank of Pakistan (Amendment) Bill, 2021.

According to a report by the Express Tribune, Pakistan had proposed that the federal government would retain the right to set policy direction and give inflation targets to the central bank in a meeting held with the Fund on Tuesday.

Quoting sources present in the said meeting, the report says that the Finance Ministry on Wednesday gave the final read to its position vis-à-vis the SBP amendment bill while keeping in mind the discussions that took place with the IMF a day earlier, the constitutional requirements, and the prevailing legal framework.

The report claims that the draft bill, approved by the Cabinet, appears to be an attempt to consolidate power in the name of autonomy.

Furthermore, the report claims that government again told the IMF that it would retain the option to borrow from the central bank, as it cannot afford to even default on local currency or let commercial banks exploit it. But the IMF mission chief was not ready to accept this change.

It claims that as the majority shareholder, the government also wanted to retain the finance secretary on the board of the central bank which it earlier had agreed to withdraw.

“The position will be shared with the IMF mission chief and on the basis of it a final meeting on the subject of the SBP bill will take place soon,” the report states.


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