• Insists talks with lender going in positive direction
• PTI senators dispute need for in-camera briefing on ‘already discussed’ issue of money laundering
• Rs5,000 note criticised for being ‘source of corruption’

ISLAMABAD: Finance Minister Muhammad Aur­a­ngzeb informed a parliamentary panel on Wednes­day that the IMF’s executive board is now expected to approve Pakistan’s $7 billion bailout programme in September.

Previously, the finance minister had anticipated IMF board approval by the last week of August, contingent on confirmation of about $12bn in debt rollovers from China, Saudi Arabia and the UAE. However, aside from a $1bn rollover by the UAE, the remaining $11bn in debt extensions have yet to materialise.

However, the minister did not go into these details while testifying before the Senate Standing Commi­ttee on Finance, only noting that the IMF board’s approval was now expec­ted in September. Talks with the lender were progressing in a positive direction, he said, adding: “We are in constant contact with the IMF.”

The standing committee’s meeting, chaired by PPP Senator Saleem Man­d­viwalla, was marked by protests from PTI senators Mohsin Aziz and Shibli Faraz over an in-camera briefing on massive trade-based money laundering through solar panel imports and the suspension of FBR officers.

The senators said the FBR had previously unearthed the solar panel import scam for about Rs73bn worth of money laundering and given a briefing to the Senate panel. Yet, the State Bank had been reluctant to come clean, although the subject fell in its jurisdiction and not the FBR’s, as solar panel imports are tax-free.

They said there was no point in an in-camera meeting on a subject repeatedly discussed by the committee in the past.

Officials believe the scam involves influential circles, which may explain the SBP’s reluctance to discuss the matter openly despite formal cases being registered against three Peshawar-based entities.

However, Mr Mandvi­walla accepted the SBP’s request for a confidential discussion. A subsequent statement from the committee noted that “an in-camera session addressed measures by State Bank officials to prevent money laundering disguised as solar panel imports”.

The newly appointed FBR chairman, Rashid Mahmood Langrial, who assumed office only a couple of days back, also gave an in-camera briefing on the officials who have been designated as Offi­cers on Special Duty (OSD) over the past two years.

The committee also int­ended to review the Dep­osit Protection Corporation Amendment Bill 2024, which is part of the benchmarks set by the IMF.

Finance Minister Aura­n­gzeb stated that the IMF has set a deadline of Octo­ber 2024 for the legislation. However, Senator Farooq H. Naek criticised the bill as unconstitutio­nal, asserting that it was introduced during the car­e­taker period and accused the Ministry of Law and Justice of misleading the Senate committee.

Mr Mandviwalla clarified that the bill was introduced by the previous car­etaker government in Jan­uary and has not yet been passed. The panel debated whether the newly elected government should reintroduce the bill. Senator Naek condemned the caretaker setup as unconstitutional, noting its rare use outside Bangladesh.

After the consensus of all the members, the committee directed that the bill be reintroduced in the National Assembly on Monday.

The meeting reviewed issues regarding digital and plastic currency. SBP Governor Jameel Ahmad reported that new currency notes were being developed and that the lifespan of plastic notes was under evaluation. It was briefed that the State Bank will internally finalise the prerequisites for introducing new currency notes by December.

Senator Shahzaib Durrani supported the introduction of plastic currency, while the SBP governor stated that plastic currency would be tested and issued based on public acceptance.

Senator Mohsin Aziz criticised the 5,000-rupee note, claiming it was a source of corruption and hoarded in unaccounted spaces. The discussion highlighted that although the note was initially valuable, its worth had diminished over time. The central bank governor assured that new currency notes would include enhanced security features.

The meeting also addressed the issue of over 800 consignments of light aliphatic hydrocarbon solvent (HS CODE 2710.1250) and the problems faced by the FPCCI at MCC Appraisement Quetta.

It was reported that, after extensive deliberation, the Department of Explosives had ordered the release of the tankers upon payment of a penalty of Rs300,000 per tanker. The issue, therefore, stood resolved.

Regarding the inclusion of provincial representatives on the EXIM Bank’s board, it was noted that the State-Owned Enterprise Governance and Operation Act 2023 requires the majority of directors to be independent. The federal government may appoint qualified individuals as independent directors, meeting the State Bank’s fit and proper criteria.

On the Export Finance Scheme (EFS), it was reported that the transition to EXIM Bank was progressing smoothly and was expected to be completed before the fiscal year 2027-28. The SBP is gradually phasing out bank limits and advising EXIM Bank on limit allocations to ensure the continuity of the export scheme.

Published in Dawn, August 22nd, 2024