East India Company II
Pakistan is a land of paradoxes and exceptions. In July 1993, for instance, the out-of-the-blue appointment of Moeen Ahmad Qureshi, a former senior official of the World Bank and the International Monetary Fund (IMF), as Pakistan’s caretaker prime minister, surprised many. In May 2019, once again, the IMF has had its ‘man in place’ when Dr. Reza Baqir, who had long been associated with the IMF, took charge as the governor of the State Bank of Pakistan (SBP). Adding insult to injury, the most recent example is of the hasty approval of the State Bank of Pakistan Amendment Bill 2021 by the federal cabinet. To secure a multibillion-dollar bailout package from the IMF, the PTI government has also increased electricity tariff by a minimum of Rs5.65 per unit to collect a whopping Rs884 billion from consumers, along with imposition of Rs140 billion more taxes.
OOther than providing loans to revive the stalled $6 billion IMF programme, the SBP Amendment Act 2021 grants absolute autonomy to the State Bank, freeing it from the responsibilities of supporting economic growth. Interestingly, the honourable cabinet members passed the bill without any deliberation or mindful scrutiny since the cabinet reportedly took merely 7 minutes to approve the most crucial move. Also, a point of major concern is the extent and the nature of autonomy that the State Bank now enjoys after passing of the amendment. In 1993, the caretaker prime minister Moeen Qureshi, pushed a series of sweeping financial reforms overtly to support the country’s ailing economy and covertly to revive its liquidation capacity. Among those reforms was to give full authority to the State Bank to make monetary policy. Now in 2021, under the aegis of the state legislation, the SBP has been exempted from any accountability or liability to the very state it serves, while the government can no more get loans from the central bank. Consequently, the SBP Amendment Act 2021 allows the IMF-run central bank to privatize national assets too. Making matters more contentious, the reference to “growth” has been deleted from the preamble of the earlier SBP Act. This suggests that the SBP will now merely focus on price stabilisation in place of playing a crucial role in strengthening the country’s economic growth and fiscal position.
The slapdash approval, and that too at the cabinet level, could be a radical shift in the country’s already compromised financial sovereignty and national security. Giving greater autonomy to the central bank was one of the pre-conditions of the IMF for releasing future tranches of its $6 billion loan. However, the manner in which the condition has been met without assessing and discussing its long-term impact on the economy as well as the country’s overall sovereignty, is by itself a contentious issue. To be honest, the move harkens back to the arrival and steady penetration of the East India Company into governance of the Indian subcontinent. Some serious deliberations are urgently required to ward off such nightmarish happenings before it’s too late. Or, is it that in order to survive, Pakistan has no choice but to cow down before the IMF diktat?
Syed Jawaid Iqbal
President & Editor in Chief