The Supreme Court of Pakistan has admitted a petition for hearing that seeks enforcement of a law that binds the government to limit public debt to below 60% size of the economy and declare appointments of governor and a deputy governor of central bank illegal.
While hearing an appeal in chamber against objections raised by the SC’s registrar office, Justice Umar Atta Bandial accepted the petition for hearing. Dr Muhammad Zubair Khan, former official of the International Monetary Fund (IMF) and former commerce minister, has filed the petition.
“The petition reflects the serious thought and presents an analysis that invites judicial consideration of the legal matters relating to financial discipline and responsibility of the State,” according to the order by Justice Umar Atta Bandial. The order stated that the miscellaneous appeal is allowed subject to all just and legal exceptions in the terms that office objections no A and B are overruled, however, objections C and D shall be cured by the appellant.
Zubair has made the federal government, Ministry of Finance, State Bank of Pakistan (SBP), former finance minister Dr Abdul Hafeez Shaikh, SBP Governor Dr Reza Baqir, Deputy Governor Dr Murtaza Syed and Federal Board of Revenue parties in the case.
Zubair has filed the petition under Article 184(3) of the constitution. The petitioner has questioned the conduct of the sovereign functions in relations to foreign debt of the state and its negative consequences for the state.
“Although the subject matter of the constitution petition concerns the monetary policy of the state, which has widespread implications for the national economy and the public at large, it is the legal obligations of the state under the constitution and the aforementioned statutes, which are sought to be enforced by this petition,” reads the order sheet.
The petitioner has pleased to the court that the violation of the constitution and law must be checked necessitating corrective measures and the government be directed to take immediate steps to ensure the implementation of Article 166 of the constitution and the mandate of Fiscal Responsibility and Debt Limitation Act, 2005 in letter and spirit.
The FRDL Act binds the government to limit the public debt to 60% of GDP or Rs27.2 trillion at current size of the economy. However, the public debt has already ballooned to 87.2% of GDP, which is roughly Rs12.4 trillion above the statutory limit defined in the law.
Importantly, the petitioner has also prayed to the court that it may declare that the appointment, functioning and working by Shaikh as being beyond the mandate of the constitution and law and be declared illegal and that appropriate orders be passed and directions be issued for rectification. The prime minister sacked Hafeez Shaikh last month and since then has appointed two finance ministers.
The petitioner has also sought to declare that the appointments of Dr Reza Baqir and Dr Murtaza Syed illegal, which the petitioner claimed were “made in a very questionable manner, and devoid of transparency and accountability, are liable to be declared as illegal and that the same beset aside”.
The prevailing economic decision-making grossly jeopardises not only future economic development but also bears a direct nexus to the daily lives of the citizens of Pakistan in the present day, argues the petitioner.
In violation of the constitution and the law, the successive governments have been incurring liability with impunity beyond permissible limits which has been worsening the economic situation to the detriment of the rights of people of Pakistan which has reached its peak by now, he added.
In fiscal year 2019-20, the government spent Rs2.709 trillion on interest payments, which was the largest amount ever on any budget item in the history of the country as a result of a self-imposed decision to raise interest rates to 13.25%, which was avoidable, and which was not in the economic interests of the country, said the petitioner.
He stated that this exposed the financial system and the foreign exchange market to high risks of severe instability by encouraging the inflow of hot money into the country.
The petition stated that the “ill-designed exercises detrimental to the economic interests of Pakistan were brazenly undertaken by an economic team appointed on the eve of signing an agreement with the IMF”.
He stated that Shaikh was appointed as finance adviser on April 18, 2019. At the time, he was a partner in the New Silk Route (NSR) Growth Fund led by CEO and Founder Parag Saxena together with two other Indian partners. As advisor to the prime minister of Pakistan, Shaikh was not authorised under the constitution of Pakistan, to make or take decisions which adversely affect, compromise and violate the fundamental rights of the citizens of Pakistan, he added.
Similarly, the present SBP governor took office on May 5, 2019, who was at the time a career staff member of the IMF serving as the IMF’s senior resident representative in Egypt. “His appointment was made in haste and has been made without following the legal procedures and the mandate as per law and the enunciations by this Court for appointments to public offices in Pakistan,” according to the petition.
“It is understandable that the IMF was able to obtain such an agreement from Pakistan’s team because both the respondents No5 (Shaikh) and 6 (Dr Baqir) had potential conflict of interest and seemingly ignored Pakistan’s national interest in order to keep their own relations with the IMF on favourable terms or due to lack of competent,” alleged the petitioner.
With an IMF man as governor, the IMF’s influence on the choice of decisions and the framework has become stronger, he argued further.
The petitioner narrated, in a startling move, the government subsequently appointed another serving IMF staff member, as deputy governor of the State Bank in violation of the legal requirements for the appointment of a deputy governor, another public office with great fiduciary responsibility.
Published in The Express Tribune, April 25th, 2021.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ