ISLAMABAD: The Pakistan Tehreek-i-Insaf-led coalition government and opposition are expected to lock horns next week over the State Bank of Pakistan (Amendment) Bill 2021 in Senate, where the latter is not only in majority but also heading the Finance Committee.

The government will make an all-out attempt to pass the bill to meet the conditions of the International Monetary Fund (IMF) amid a clear message from main opposition parties — Pakistan People Party and Pakistan Muslim League-Nawaz (PML-N) — to block its passage in the Upper House due to their numerical strength. This will be a test case for the opposition parties’ claims.

Delay in passage may lead to rescheduling of IMF board meeting for second time

The IMF board meeting is scheduled for January 28 and will take up Pakistan’s request for approval to ensure the release of $1 billion for the country. However, it is linked with prior actions — the Finance (Supple­mentary) Bill 2021 and the State Bank of Pakistan (Amendment) Bill 2021.

The Finance (Supplementary) Act 2021 has already been enacted through parliament.

A senior official in the Ministry of Finance told Dawn that the SBP Amendment Bill will be introduced in the Senate on Monday and government has no time but to bulldoze it through the Upper House. The government lacks majority in the Senate which could lead to a possible delay, the official said.

However, the official claimed that it will be managed to sail through the Senate.

Under the rules, the SBP bill will be referred to the Senate Standing Com­mittee on Finance and Revenue for clause-wise discussion and approval of the amendments. The committee will then return its report on amendments to the Senate. The chairman may give a specific time frame to the committee for giving its recommendations.

After presenting the report to the Upper House, a 48-hour notice is given to members before presenting this bill for voting. However, the government has an option to get this rule suspended through a motion as it did in the National Assembly when the SBP bill was passed on January 13.

According to the official, the delay in the passage of the bill next week could lead to the rescheduling of the IMF board meeting for the second time. Earlier, the board meeting was scheduled for January 12, which was rescheduled to January 28 to give time to Islamabad for implementing the prior actions.

On the other hand, PML-N senior vice president and former prime minister Shahid Khaqan Abbasi has asked the government to allow debate on the SBP amendments before implementing it.

On January 18, Mr Abbasi said that whenever the PML-N would come to power, it would “reverse” the SBP law through an ordinance as it was against the country’s ‘economic sovereignty’. Similarly, the PPP also demanded a thorough debate on the amendments.

The SBP Amendment Bill 2021 promises complete autonomy to the central bank and places a complete restriction on the government’s borrowing from the central bank. However, government now can borrow at a market rate from commercial banks, which will benefit private banks owned by business elites.

All told, the 54 amendments, including 10 new sections, have been introduced to the SBP Act 1956. The SBP Amendment Bill 2021, first appro­ved in a cabinet meeting on March 3, 2021 was revised earlier this month following observations from the Law Division, Prime Minister Secretariat.

The proposed amendments include domestic price stability as the primary objective of the SBP. To achieve this, the central bank will be guided by the medium-term inflation target set by the government.

Though supporting the government’s development agenda will be a tertiary objective of the SBP, the central bank is believed to continue government’s policies for economic growth as far as this support does not undermine its primary objective of price and financial stability.

Published in Dawn, January 23rd, 2022