Thursday May 23, 2024

East India Company strikes back via SBP Bill 2021

By Senator Rehman Malik
April 04, 2021

Pakistan is going through multiple external & external crises. The economic crises starting from ‘foreign debt servicing’ and ‘local/internal debts’ are growing day by day and the govt is changing the drivers but not the economic vehicle which needs to be totally reconditioned as it is unable to stop the collapsing of the economy.

We are in trouble today because of lack of vision in our policies and the govt does not thrash out the multiple aspects of fiscal policy. It carries out all the policies on the basis of the directions given by IMF without protecting the national interest and the well-being of the common man. Let me discuss first what we are facing and what are the long terms effects of following IMF.

IMF wants to push us towards the bankruptcy by devaluing our currency and allowing the inflation rate to ensure the price hike forcing the public to be on the streets. We should not forget that the west is very upset about our nuclear assets and it will keep hitting us and pushing us towards bankruptcy. It will have worst negative effects which could be a big threat for nuclear assets. It is strange to see that this amendment bill 2021 which has raised lot of hue and cry among the business men at all levels & will put severe negative effects on our economy to give unchecked total autonomy to the Central Bank of the country which means handing the control of “KHAZANA" to the Chief of SBP.

I think that one blunder of allowing East India Company should not be allowed to be replicated by displaying rosy picture to Pakistan business community. It will have us stuck into further deep crises. These are our mistakes and policies that today we are forced to import commodities from India - where are we heading my dear countrymen?

As per the proposed amendment, immunity from any law suit or inquiry and investigation by NAB or FIA has been granted to the SBP management including present or former Board of Directors, Governor, Deputy Governors, member of any Board committee and monetary policy committee or the staff of the Bank for any illegal act or performance of any functions or any legislation administered by the Bank. Our country cannot afford this level of autonomy and immunity to such a critical institution as it will be detrimental to our economy as well as the sovereignty of our country. Not only this but the tenure of the governor, deputy governors, external members of Monetary Policy Committee and non-executive board members has also been increased from 3 years to 5 years with two terms allowed and also one year's extension.

As per the latest proposed amendments, the objectives of SBP have been specified for price maintenance and financial stability. While the government has justified this autonomy as a way to maintain price, there is no mention of the inflation targets or price stability. In what capacity can the state bank control the inflation? Moreover, now govt can pay salaries (though it is bad) by printing currency, whereas, restricting to print currency or loan to our foreign debt ridden country will come under heavy pressure and we will be forced to beg for more loan? The government will not be able to borrow from SBP under any circumstances which will badly affect the financial needs of the government and national exchequer and this will create hardships for the govt pushing us to bankruptcy.

The entire business community is showing serious objections and reservations on these amendments as SBP will now not finance any rural credit, industrial credit, export credit, loans guarantees, and housing credit which means these sectors will get to great trouble and mafia with cash will flourish at the cost of common man and the small business community. The proposed amendments are posing serious threat to the sovereignty of our country as the independent State Bank will be omitted from the State domain and it will be the State under obligation to become the subordinate the State Bank.

Independent SBP will be dictating all our institutional and state secrets and operations in the national interest will be directly subject to security. State Bank will be under legal ambit to supply the information as already committed to the international community via FATF.

The bill excludes any government representation on the State Bank Board of Directors as no member of Parliament or any state institution will be allowed to become a part of SBP or even allied to question its irregularities in the Parliament or in any court. What a destruction of our economic system by some geniuses working for IMF it would be. Its basic agenda is to compel the government to prioritise meeting the country’s foreign debt obligations over all other expenses and then continue to take new loans from IMF to increase its authorities.

According to the new bill, the monetary policy is the exclusive domain of State Bank while fiscal policies will be under federal government which will severely compromise and damage the macroeconomic management of the country as there will be no coordination or coherence between both the domains as these amendments are contradictory and are being brought in with ulterior motives to push the country to bankruptcy. In fact, it has been unwisely decided that now SBP is being given the status of the supreme prestigious institution of the state which would be above any law that even the Constitution.

The Parliament, which can even remove a prime minister, cannot invoke against SBP or remove the SBP Governor or Deputy Governor under any circumstances. It will only be a formality that the Governor would submit an annual report or half yearly report, not less than that before the Parliament regarding the achievements without any sort of accountability. What is the use of that report which can be dissected for the purpose of legal action? It is just an eyewash as this report cannot hold the SBP, Governor or any other employee of SBP responsible for any wrongdoings or losses.

The president of Pakistan, PM and the treasury benches must not allow the implementation of these imported ideas duly directed by IMF as it will make our nation its slave permanently.

(The views expressed are solely mine and do not necessarily represent the views of my party.)

The writer is former interior minister of Pakistan, ex-chairman Senate Standing Committee on Interior and Chairman of Think Tank "Global Eye" & Institute Research & Reforms (IRR) Islamabad.

He can be reached at:, Twitter @Senrehmanmalik