The federal cabinet will today (Tuesday) take up two contradictory summaries - first seeking to appoint a new member of the Monetary and Fiscal Policies Coordination Board and second to abolish the board under the new central bank autonomy bill.
Both the summaries have been moved by the Ministry of Finance and are part of the agenda of the cabinet meeting, to be chaired by Prime Minister Imran Khan.
The government has decided to remove Dr Waqar Masood Khan, former finance secretary and former special assistant to prime minister on revenue, from the Monetary and Fiscal Policies Coordination Board (MFPCB), sources told The Express Tribune.
Khan has been a member of the board since September 2020 but he is being removed without his consent.
“I have not resigned from the position of MFPCB member,” Khan confirmed to The Express Tribune.
Earlier, the government had removed him from the Institute of Chartered Accountants of Pakistan (ICAP) Council, which was a protected tenure.
The finance ministry stated that Khan was being removed due to his pre-occupation with the private and domestic engagements.
An official of the ministry said that the MFPCB tenure was not protected under the law and the person could serve as long as the government wished him to serve.
The federal minister for finance is the chairman of the board and its members include the federal minister for commerce or commerce secretary, Planning Commission deputy chairman, State Bank of Pakistan governor, Finance Division secretary and two eminent macro or monetary economists.
Khan had been appointed the board member under the category of eminent economist.
The Finance Division has proposed three names for consideration of the cabinet with a request to pick one of them.
These are Prime Minister’s Economic Advisory Council member and LUMS Professor Dr ljaz Nabi, LUMS Associate Professor of Economics Dr Syed Mohammad Hassan Shah and Lahore School of Economics Dean Faculty of Economics Dr Azam Chaudhary.
The federal government had set up the MFPCB in 1994 as part of the central bank’s reform process, also guided by the IMF at that time.
The board has the authority to coordinate fiscal, monetary and exchange rate policies, ensure consistency among macroeconomic targets of growth, inflation and fiscal, monetary and external accounts.
It also determines the extent of government borrowing from commercial banks taking into account the credit requirement of private sector, liquidity expansion, reviews the consistency in macroeconomic policies and revises the limits and targets set at the time of formulation of budget, keeping in view the latest developments in the economy.
However, despite its desire to retain the board to have better coordination, the government has agreed to abolish the board under the new State Bank of Pakistan Amendment Bill 2021, drafted under a loan condition of the IMF.
Ironically, the federal cabinet will first appoint a new member of the board and then take up the bill for approval that seeks to abolish the board, showing the inconsistency in decision-making.
If appointed, the new member will stay for hardly two weeks, as the deadline to approve the SBP Amendment Bill is January 12, 2022.
The SBP bill seeks to give in everything including the constitutional right to borrow money from the SBP but, in return, it does not ensure accountability of the central bank.
According to some analysts, with the approval of the SBP Amendment Bill, the government will cut its hands that may one day lead to default on even domestic loans.
The federal cabinet will also take up a summary to accept the resignation of the chairman of the policy board of Securities and Exchange Commission of Pakistan, Masoud A Naqvi, and appoint Mehmood Mandviwalla as new chairman of the policy board.
Mandviwalla is an eminent lawyer who has served on the SBP board.
Published in The Express Tribune, December 28th, 2021.
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