SBP bill puts ‘national security’ at risk
Opposition lawmakers expressed concern on Friday over the passage of the SBP Amendment Bill 2021 from the Senate, saying this legislation will have negative implications for the political and national security of Pakistan.
In a dissenting note signed by dozens of senators, the lawmakers pointed out lacunas in the bill as well as its ramifications on the issues that pertained to national security. According to the senators, the amendments proposed in the bill will “make Pakistan a worst example of modern-day colonialism”.
Not only will the bill have an impact on the China-Pakistan Economic Corridor (CPEC) project, this will also put Pakistan’s foreign policy and ties with its neighbours under strain, the lawmakers claimed.
They feared the defence budget will be affected as well along with the funding for the nuclear programme.
“There will be one account for defence expenditure in the SBP, which will be under the scrutiny of the IMF,” the letter said, adding that the US and India will have an “oversight over the defence project through SBP i.e. IMF-controlled bank”.
These amendments will subject Pakistan to “financial colonialism”, they said, adding that finance will also go under the scrutiny of the US.
“This is a document of financial surrender,” they said, adding that national security and assets will be under severe strain and scrutiny of the “financial imperialists”.
Lacunas in SBP bill
According to the senators, as per the bill, the central bank, which is always the lender of last resort, will no longer be able to mobilise the funds needed in time of crisis, nor will the government’s ability to issue sovereign guarantees listed as contingent liabilities be possible.
There will be a complete ban on government borrowing from the central bank, the lawmakers said.
“The amendments propose that the quasi-fiscal operation defined as monetary action taken on behalf of the government would be discontinued, however, refinancing facilities/SBP has used to support to access to credit in the underserved sector are still allowed.”
Read Pros and cons of SBP autonomy
It said the bill proposed the salary of the SBP governor to Rs15 million per month and the tenure of the SBP chief be extended to five years instead of three years.
The two deputy governors of the SBP will enjoy similar perks, the opposition lawmakers added.
“The amendments propose to establish an exec committee to make policy decisions related to bank’s core functions as well as administration and management matters. The committee shall consist of the governor, deputy governors, executive directors, and other officers as needed,” they added.
They said only the governor and deputy governors will have the right to vote, adding that the amendments propose to have 54 amendments, including 10 news sections that have been introduced to SBP Act 1956
According to amendments, the SBP will continue to support the government over economic policies but as long as this doesn’t undermine its primary objective of financial stability.
As per the lawmakers, the finance secretary will be a non-voting member of the SBP’s board of directors. The deputy governors will have a right to attend board meetings but they will not be allowed to vote, it added. They said that as per the amendments, the SBP governor can appoint anyone as the acting-chief of the SBP in his absence.
The SBP will not extend direct credits or guarantee to any obligations of the government or any government entity, the lawmakers added.
The amendments propose that the SBP shall not purchase government sureties - debt instruments that the government sells to fund its daily operation and project – in the primary markets where securities are first created or issued, the lawmakers wrote in their dissenting note.
The SBP governor and its non-executive director will be appointed by the president on the federal government’s recommendation in line with the criteria laid out in the act, whereas the deputy governors will be appointed by the federal government after consultation with the finance minister and the governor, they added.
“They will be appointed from a panel of three candidates recommended by the governor for each vacant post in order of merit,” the note said.
“External members of the Monetary Policy Committee will be the federal government on the recommendations of the SBP board.”
The amendments provide immunity to the governor, deputy governors, directors of the board, including the sitting directors or those who have completed their terms or retired, from the NAB and FIA, as per the SBP bill.