KARACHI: President Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Mian Nasser Hyatt Maggo has taken the central bank to task for their miserable handling of the latest T-Bills Auction; resulting in hefty costs to the national exchequer in an unfair, needlessly costlier and uncompetitive government debt issue.
He was referring to the latest T-Bill auction for a period of three months at 10.75 percent and six months at 11.5 percent; while policy rate is maintained at 8.75 percent.
Mian Nasser Hyatt Maggo noted with profound concern that even the Finance Minister Shaukat Tarin admitted on national television that SBP should have checked and prevented the manipulative manner in which the commercial banks were able to sell 2 percent over and above of the policy rate for three months T-Bills and 2.75 percent for six months.
Mian Nasser Hyatt Maggo maintained that if he was in SBP’s shoes he would have fined commercial banks heavily for their rent-seeking behaviour in the middle of a deal with International Monetary Fund (IMF); and grasping the sensitivity and criticality of the situation that the government cannot any longer borrow from the central bank. This tantamount to blackmailing in the hour of need, he added.
FPCCI Chief maintained that a correction is warranted and justifiable through cancellations of the awarded bids or else SBP should stop Open Market Operations (OMO) for the commercial banks to make them fall in line in the larger national interest; else, commercial banks will continue to fuel inflation through speculative buying into government debt – implying that policy rate is going to go up further. This kind of regulatory measure is permitted under banking laws and regulations already at disposal of SBP.
Mian Nasser Hyatt Maggo said that the speculation this time around by commercial banks is unprecedented and they created panic through implying by the means of their actions as if policy rate is going to be raised by 200 bps; nonetheless, the fact of the matter was that the core inflation had fallen to 7.6 percent and there was no increase in key policy at the latest meeting of the Monetary Policy Committee (MPC).
Mian Nasser Hyatt Maggo further said that FPCCI always keeps its doors open to the government; but, they seldom consult the apex, representative and federal chamber of the country. We could have provided the timely, workable and objective advice, had we been contacted, he added.
Copyright Business Recorder, 2022
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