Bill to restrict government borrowing to be tabled in National Assembly: monetary, fiscal policies board also to be replaced

The bill to amend State Bank of Pakistan Act 1956 will be presented before National Assembly on Monday, November 1.for approval. The bill would restrict lending to the government and replace the monetary and fiscal policies board with monetary policy committee statutory status with external experts.
Replying to questions here on Saturday after the seminar "Making the 18th Amendment and the NFC Award work," organised by the Forum of Federations, Finance Minister Dr Abdul Hafeez Sheikh said the government is bringing SBP Act in the Parliament for approval. The bill has been placed on agenda for the first day of National Assembly session.
The bill, unanimously adopted by the Finance Standing Committee of National Assembly without any change and reported to the last session of the House, prohibits lending to the government with insertion of a new clause (Section 20-A).
The clauses states that "State Bank shall not grant any direct of indirect credits to the federal government, or as the case may be, the provincial government or any other public agency or state owned entity, with the exception of intra-day credit to secure smooth functioning of the payment system. Such intra-day credits shall be fully repaid before the end of the same day."
The Monetary and Fiscal Policies Co-ordination Board is redundant in terms of current practice. It is proposed to replace it and give the current Monetary Policy Committee statutory status, with external experts to be appointed by the federal government.
The Central Board will be represented by two members on the committee which will be responsible to formulate, decide and implement the monetary policy and decide on matters such as those relating to key interest rates, supply of reserves, exchange rate policy, and the limits and nature of advances and loans to the government. The main object for introducing this statutory committee is to facilitate the State Bank''s autonomy in performance of its essential functions in the changing financial, environment.
To a question about withdrawal of exemption in the Reformed GST, the minister said the original spirit of Value Added Tax in the Reformed GST will be preserved.
"We will be doing everything according to the original drafted bill and its key features will be preserved," he said, however, he avoided giving direct reply regarding withdrawal of exemptions in the law likely to be submitted in the forthcoming session of the National Assembly.
The key feature or spirit of the original VAT law was that all the exemptions and zero ratings would be withdrawn as well as documentation of the entire supply chain sector.
Hafeez said there is more pressure on him than anybody else to mobilise resources but it would be done in a manner so that there is least impact on the common man.
Replying questions about transfer of responsibilities from center to the provinces after the approval of 18th Constitutional Amendment and the National Finance Commission (NFC), he said 10 ministries - Population Welfare, Youth Affairs, Local Bodies and Rural Development, Zakat and Usher, Special Initiatives, Culture and Tourism, Special Education, Social Welfare, Special Education and Minorities'' Affairs - would be abolished at federal level before the end of current calendar year. Some would be abolished and some of them would be devolved at provincial level in line with the approval of the 18th Amendment. A committee is working in this regard with Senator Raza Rabbani, he added.
Earlier, speaking at the seminar, the minister said the NFC Award is a landmark achievement that resolved long-standing issue of distribution of resources from the Divisible Pool amicably among the provinces.
He said demand of the provinces that resources from the Divisible Pool should be distributed among the provinces through multiple criteria had been met. The minister said continuation of the democratic process would also result in settling of all other issues as well.