Prime Minister's Advisor on Finance and Revenue Dr. Abdul Hafeez Shaikh has said that autonomy of State Bank of Pakistan (SBP) should be accompanied by some checks and balances, well-informed sources told Business Recorder.
He was responding to a question raised in the federal cabinet on April 14, 2020 presided over by the Prime Minister, when the minutes of Cabinet Committee on Disposal of Legislative Cases (CCLC) came discussion for ratification. CCLC had deferred the summary of Finance Division.
Ministry of Finance, in its summary to the CCLC had proposed removing SBP Governor from the post of the chairman of the SBP Board of Directors (BoD) to keep the central bank's activities in check after its management's aggressive bid for complete autonomy.
According to media reports, SBP wants the abolishment of finance minister-led Monetary and Fiscal Policies Coordination Board, an end to the role of federal government in quasi fiscal operations, the removal of the secretary finance from SBP Board, a five-year secured term for the governor with an option to extend it by another five years and little option to remove him before the expiry of the term.
During discussion, a member drew the attention of the Cabinet to the news reports appearing in the press about the ongoing friction between Finance Division and State Bank of Pakistan over the amendments in State Bank of Pakistan (amendment) Bill 2020.
The cabinet member referred to media reports according to which the Finance Division was reportedly trying to curtail the powers of Governor State Bank of Pakistan while the latter was vying for greater autonomy.
Advisor to the Prime Minister on Finance and Revenue, clarified that Finance is not averse to the idea of autonomy of State Bank but it should be coupled with some mechanism of checks and balances.
He further stated that the issue was under debate among stakeholders, as per normal procedure and had been blown out of proportion in the media,
Meanwhile, on April 13, 2020, CCLC also deferred a summary of Cabinet Division titled "amendment in OGRA Ordinance 2002-IMF's External Fund Facility (EFF) for Pakistan 2019-2022- structural benchmark and performance criteria" saying that sovereignty of the State would not be compromised on the direction of anyone,
Cabinet Division informed the CCLC that OGRA was established under OGRA Ordinance 2002 to regulate midstream and downstream oil and gas sector. The Authority is placed under the administrative control of Cabinet Division.
The CCLC was also apprised that during the meetings with the IMF Mission in April-May 2019, the Petroleum Division agreed to certain structural benchmarks under the 2019-2022 EFF program which includes one benchmark related to gas sector which is as follows " propose changes to the OGRA Act for approval by the Council of Common Interests (CCI) by end December 2019 to eliminate the gap between regular semi-annual tariff determination and notification. After CCI's approval, a bill will be introduced in the Parliament for adoption,"
The CCLC was further apprised that this condition had to be met by the end of the 2nd quarter i.e. December 2019. In order to meet the above benchmark, the Petroleum Division and OGRA proposed relevant amendments in section 8 of the OGRA Ordinance, 2002.
During a discussion, members of the committee pointed out that the amendments are being proposed in the Ordinance as per directions of IMF and desired the instrument which was discussed with IMF may be placed before the committee for its perusal. It was also observed that the sovereignty of the State would not be compromised on the direction of anyone. The members also raised observations on the proposed amendments. It was also desired that since the amendments have been proposed in the OGRA Ordinance under which some other laws presently enforced are also required to be amended or non-obstante clause may also be added to the proposed amendments.
The CCLC issued the following directions ;(i) Finance Division to submit the instrument regarding IMF's EFF for Pakistan 2019-2022- structural benchmark and performance criteria under which the amendment has been proposed in the OGRA Ordinance 2002 for perusal of the members of CCLC;(i) either the amendments may also be proposed in the relevant laws such as Income Tax Ordinance, GDS or non-obstante clause may be added to the proposed amendments and;(iii) the summary for the CCLC along with annexes should be properly page-numbered and legible.
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