Economic experts say SBP’s proposed autonomy lacks transparency

ISLAMABAD: The government’s move to make the State Bank of Pakistan (SBP) autonomous is part of the IMF’s agenda that lacks transparency and goes against national interest, economic experts said on Tuesday.

Khalid Rahman, chairman of Institute of Policy Studies believed some government officials have moved the bill with mala fide intentions to either turn the SBP into a subordinate institution of the IMF or pose themselves as more loyal to the IMF than the country. He stressed the need for ensuring transparency in the whole affair as its absence is giving rise to extraordinary speculations which are detrimental to national interest.

Former chief economist Pervez Tahir lamented the removal of the word ‘national interest’ from the preamble of the existing SBP Act and argued that the proposed bill would delineate responsibility for controlling inflation to the SBP.

Tahir said controlling prices of food items is a provincial subject and has nothing to do with the SBP which can only control core inflation that has not increased substantially in recent years. Pakistani government is giving much more than what International Monetary Fund (IMF) or World Bank could actually demand from a sovereign state through the proposed amendment.

Shahida Wizarat, dean of College of Economics and Social Development, Institute of Business Management, said independence of institutions can only be achieved through holistic policies. Pakistan’s policies are not indigenous, rather dictated, as most of the officials running important institutions are imported which underlines the continuation of colonial era in this part of the world. “Absolute autonomy to the SBP is tantamount to making Pakistan subservient to the IMF and the World Bank.”

Chartered accountant Qanit Khalil termed the proposed autonomy to the SBP in line with the global trend. However, he argued independence does not guarantee price stability and economic growth of a country as proven by many studies. He also suggested further reduction in interest rates in Pakistan, which pays 45 percent of its tax revenues to debt servicing – a number much higher than the developed markets where it stands at less than 5 percent.

Abdul Saboor, dean faculty of Social Sciences, PMAS said autonomy of the SBP hinges on the progress of all the other institutions. However, this progress will remain a pipe dream unless the government introduces governance reforms.

State institutions will never strengthen unless the country develops on all economic fronts. He accentuated the need for developing a counter mechanism so that foreign institutions are not able to exploit the weaknesses of the country’s institutions.