ISLAMABAD: The federal government has convened a National Assembly session tomorrow (Monday) to table the State Bank of Pakistan’s (SBP) “absolute autonomy” bill in order to legislate the matter.
According to details, the President of Pakistan Arif Alvi has summoned a session of the lower house of parliament at 4pm on Monday. The proposed bill has been approved by the federal cabinet and will now be presented in the National Assembly for Act of Parliament.
The issue to make SBP more independent has given rise to a raucous debate, which primarily aims at targeting inflation rather than economic growth.
The amendments propose to reset domestic price stability or inflation targeting as the SBP’s primary objective, freeing it from the responsibility of supporting growth, and barring it from direct lending to the government.
Financial stability is defined as its secondary objective and support to the government’s economic policies to foster development and fuller utilisation of resources as its tertiary objective. At present, its core responsibility is to secure monetary stability and support the government’s growth objectives.
Ever since the approval of the draft SBP Amendment Bill 2021 to meet one of the key prior actions for the revival of the $6 billion IMF loan, the market is abuzz with reports that the SBP may discontinue subsidised loans for promoting housing sector, small and medium industries, agriculture and exporters.
Many have raised fears about its long-term impact not only on the economy but also on the country’s overall sovereignty. Meanwhile, PML-N has categorically declared that it would not support the government’s move.
PML-N leader Mohammad Zubair expressed his party’s reservations over the bill saying that they would not allow it to be passed. “After its passing, the premier, finance minister and the Parliament would lose any and all control over the SBP,” he added.
