Saturday December 02, 2023

IMF programme lands in deeper controversy

There are three personalities who should be inquired about this whole fiasco and then responsibility could be fixed

November 13, 2021
IMF logo
IMF logo

ISLAMABAD: The stuck-up IMF program landed into deeper controversy mainly because the laid down procedures for clearing legislative business related to the State Bank of Pakistan (SBP) Amendment Bill through Cabinet Committee for Disposal of Legislative Cases (CCLC) were bypassed on wish and whims of powerful elements.

Now, this lingering controversy has resulted in increasing uncertainties on Pakistan’s macroeconomic front as the rupee continues sliding and touched new heights against the US dollar on Friday.

There are three personalities who should be inquired about this whole fiasco and then responsibility could be fixed. One top official said that the then Adviser to PM on Finance Dr. Abdul Hafeez Shaikh, Governor State Bank of Pakistan Dr Reza Baqir and then-Secretary Finance could share all relevant details to ascertain what exactly had happened after which the SBP’s bill 2021 was bulldozed by getting a waiver from the CCLC at the first stage and then passed by the federal cabinet without going into full details and scrutiny.

There is a need to give replies to certain relevant questions on this lingering stalemate. Why the CCLC was bypassed last time because it resulted in compromising the whole due process.

Who insisted upon such kind of haste as now it has surfaced that the proposed amendments into SBP bill 2021 required constitutional changes and the incumbent regime lacked a majority in the parliament to pass this piece of legislation.

Then the federal cabinet had passed the SBP bill 2021 in haste and there is a need to give a reply to this question who asked the federal cabinet to pass it in just 10 to 15 minutes. The sources said that the former Secretary Finance Kamran Afzal was stopped from sharing details about the proposed changes into the SBP amendment bill 2021.

Before blaming the IMF, there is a need to clean our own house as it should be ascertained why the Cabinet Committee on Legislative Business (CCLC) was bypassed and now the incumbent Adviser to PM on Finance Shaukat Tarin had termed it as a problematic part for getting additional $500 million from the IMF. He had used the Urdu phrase “Gally ka Tauq” to explain his difficult situation.

There are three worrisome developments occurring on the economic horizon. First of all, Pakistan and the IMF have so far failed to strike a staff-level agreement despite the claim made by the Adviser to PM on Finance Shaukat Tarin almost two weeks ago that the deal would be done in one-or two-day time-frame. Now two weeks have already passed but there is no development on evolving a consensus on Memorandum of Financial and Economic Policies (MEFP) under the $6 billion Extended Fund Facility.

“The IMF’s mission chief, Ernesto Ramirez Rigo, held virtual meetings with Law Minister Farogh Naseem but there is no apparent breakthrough on the lingering controversy over the draft bill of State Bank of Pakistan (SBP). There is no progress achieved on the subject of SBP’s amendment bill 2021,” top official sources said while talking to this scribe here on Monday. The second problem that continues to haunt the Ministry of Finance was related to uncertainties for Shaukat Tarin himself as the government announced to award him a Senate ticket from KP but there is not much progress that occurred afterward.

Thirdly, there is no communication strategy, which is fueling more uncertainties. When the country’s foreign exchange reserves were increasing, then there was no justification for rampant sliding of the exchange rate. According to the SBP, the total liquid foreign reserves held by the country stood at $24.02 billion on 05-November-2021. The break-up of the foreign reserves position stated that foreign reserves held by the State Bank of Pakistan stood at $17.32 billion and net foreign reserves held by commercial banks were standing at $6.69 billion. During the week ended 05-November-2021, the SBP reserves increased by $126 million to $17.32 billion due to GOP official inflows.