Despite the strong opposition against it, the PTI government eventually succeeded in getting the State Bank Amendment bill passed by the Senate by a razor-thin majority.

The State Bank of Pakistan (SBP) Act, however, fell short of what appeared to be the dominant view forged in the extensive and intensive debate on the bill within and outside the government and the parliament Finally, the informal view found expression in a note of dissent by the opposition in the Senate. It said the draft law was a ‘document of financial surrender.’

The case for institutional autonomy has particularly found support among economists who, given the ground realities, find the SBP Act not as bad as perceived by the opposition parties.

Commenting on the new SBP law, an observer with insight says: “ it must be borne in mind that in Pakistan de jure, or laws on paper, are rarely applied and de facto conditions (the existing state) apply on an entire range of government appointments and functions.”

But it may be pointed out that changing ground realities and the country’s courts are prompting policymakers to strictly adhere to constitutional provisions. It is the denial of autonomy to semi-autonomous institutions and corporate state enterprises that have sapped their vitality and efficiency and made them financially unviable.

The underlying message for political parties is that people matter, more so in these turbulent times — mudslinging does not help

The business community is also handicapped with what it sees as the increasing government’s intervention in the realm of business. CEO Nishat Chunian Shahzad Saleem says: ”If we want to mitigate investment risk, we must reduce the state’s interference.”

To quote a senior political economist, Dr Pervez Tahir, “the State Bank autonomy has been forced by the International Monetary Fund. Judicial recourse has restored Higher Education Commission’s relative autonomy. But Pakistan’s Bureau of Statistics (PBS) still awaits autonomy”.

PBS has often been criticised for allegedly churning out inaccurate data especially on prices when it was part of the finance ministry.

The organisation has now been transferred to Planning Commission (PC). Mr Tahir argues that “the PC fixes the economic growth target and is therefore in direct conflict with the producer of the actual number.”

The issue of federalism — autonomy related to both the provinces and the LGs — has also come under renewed national focus.

On the 1st of February, the Supreme Court judgement emphasised that article 143-A of the Constitution casts a mandatory obligation on the provinces to establish a local government possessing a meaningful authority and responsibility in the political arena and administrative and financial matters. The court had reserved its decision on October 26, 2020, in the plea filed by MQM-P.

To quote an analyst, “financial powers have always been missing from our local bodies systems.”

The agreement between the Sindh government and Jamat-i-Islami (JI) stipulates that the establishment, meeting and award of the Provincial Finance Commission will be held within 30 days of the elections to finance LG’s development programme.

The MQM-P says the decision to make the mayor the chairman of the water and sewerage and solid waste management board comes without any financial and administrative powers. PPP chairman Bilawal Bhutto has however promised that collection of property tax will be transferred to municipal authorities. After the Supreme Court Judgement, the opposition parties in Sindh are demanding a consensus-based local body law.

An empowered LG system could enable the Urdu-speaking cultural minority to manage its affairs in those urban areas where they are in a majority. That would possibly mitigate the ethnic divide in Sindh.

The National Finance Commission (NFC) is facing a prolonged deadlock. Maintaining that the 7th NFC award is skewed in favour of the sub-federations, the PTI government wants the sub-federations to share federal expenses. The provinces have refused.

Disagreeing with the centre’s view, Dr Kaiser Bengali says the problem arises with the interpretation of the federal income-expenditure balance sheet.

He explains: the budget 2021-22 estimated tax collection of Rs5.8 trillion of which Rs3.3tr would be the provincial share vide the 7th NFC award, leaving the federation with Rs2.5tr. Adding Rs2tr non-tax revenue, the federal revenue shoots up to Rs4.5tr. Of this, he adds, Rs4.4tr will be spent on defence and debt servicing.

Under the 18th Constitutional Amendment, the Concurrent List was to be abolished to reduce the federal expenditure and to increase that of the provinces. That did not strictly happen as provided by the amendment. “The federation is itself responsible for its (financial) dysfunctionality,” says Mr Bengali.

Then there are initial signs of change in politics. Independent observers say the agreement between JI and Sindh government is a major JI success heralding its comeback into active, electoral and issue-based politics in Karachi. And that stands out in sharp contrast to what happened in the first phase of the LG elections in Khyber Pakhtunkhwa.

The detailed results announced by the Election Commission show that the share of independents participating in the polls was the highest both in contesting and returned candidates, says social activist Sarwar Bari, adding, “The traditional parties were overwhelmed.”

And according to his findings, the independents included PTI men who felt they would lose in the polls if they accepted the party ticket or those who were denied the party ticket. The underlying message for political parties is that people matter, more so in these turbulent times. Mudslinging does not help. But for any form of democracy to function smoothly, a political party system is a must.

Published in Dawn, The Business and Finance Weekly, January 7th, 2022