IMF, govt show flexibility on granting autonomy to State Bank of Pakistan

arifkarim

Prime Minister (20k+ posts)
IMF, govt show flexibility on granting autonomy to State Bank of Pakistan
Mubarak Zeb Khan Published October 31, 2021 - Updated about 19 hours ago

A logo of the State Bank of Pakistan is pictured on a reception desk at the head office in Karachi, July 16, 2019. — Reuters

A logo of the State Bank of Pakistan is pictured on a reception desk at the head office in Karachi, July 16, 2019. — Reuters

ISLAMABAD: To break the deadlock over revival of $6 billion Extended Fund Facility, Pakistan and the International Monetary Fund have decided to show some flexibility in their stance on the issue of granting autonomy to the central bank, Dawnhas learnt from knowledgeable sources.

Both sides began talks on Oct 4 through virtual interaction. The talks were scheduled to conclude by Oct 15 but continued until Oct 23. Since then, the IMF and Pakistan’s finance ministry have remained tight-lipped over the release of a memorandum of economic and financial policies (MEFP) — a report which carries Pakistan’s commitment to specific time-bound targets.

Informed sources told Dawn that the IMF was not happy with Islamabad’s position to backtrack on its commitment to granting autonomy to the State Bank of Pakistan (SBP). In March 2021, Pakistan reached an agreement with the Fund on granting autonomy to the central bank, which was also approved by the IMF board.
Pakistan’s economic team led by Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin has had several rounds of talks with the Fund officials to apprise them of numerical strength of the ruling Pakistan Tehreek-i-Insaf in the lower and upper houses of parliament where the Constitution will be required to be amended to grant autonomy to the SBP.

During the course of negotiations, the IMF was informed that the proposed autonomy needed constitutional amendments, which required two-thirds majority in both houses. Interestingly, the need for amendments was either not realised or overlooked when the Pakistani team agreed to grant autonomy to the SBP.

Constitution needs to be amended for bringing any change to SBP status

On March 9, the federal cabinet cleared a bill which was aimed at providing greater autonomy to the central bank over price control and fighting inflation. Autonomy was also linked with adopting exchange rates and monetary policy in an autonomous manner without the government’s interventions. Under the proposed law, no one will question decisions of top officials of the SBP.
Soon after the decision, two leading opposition parties — the Pakistan Muslim League-Nawaz and the Pakistan People Party — announced that they would block the passage of the bill in parliament.

As a result of these negotiations, the sources said the IMF had now shown some flexibility and talks continued on the draft amendments related to the SBP. “The finance ministry has shard revised proposed amendments on the SBP with the Fund,” the sources said.

According to the sources, these amendments will now be reviewed by the Fund officials who will give their response early next week. The finance ministry is hopeful that the amendments will break the deadlock and pave way for finalisation of the much-awaited review for the release of next tranche, according to the sources.
These amendments are related to four to five areas in the State Bank Act. The negotiations on the draft amendments are continuing and are expected to finalise early next week. The MEFP will be released as soon as talks are completed.

Meanwhile, Pakistan and the IMF have finalised their commitments on the fiscal side.
Pakistan held out an assurance to the Fund in March that it will withdraw tax exemptions mostly related to sales tax.

“The withdrawal of these exemptions is limited to non-essential or luxury items in the list which entails 250 to 300 items,” the sources said.
Mr Tarin has also hinted at bridging the gap of Rs450 billion in revenue the government had given up on petroleum products from rationalisation of taxes. However, he was not willing to disclose details in his last press conference.

Under the IMF program, IMF concern is only with primary account – the difference between revenues and expenditures excluding debt servicing. Mr Tarin is optimistic about the primary balance remaining in surplus, which is the only concern of the IMF.
Meanwhile, in the absence of revival of the IMF package, Saudi Arabia has approved a financial package in the form of $3bn in safe deposit and $1.2bn worth of petroleum products supplies on deferred payments.
Published in Dawn, October 31st, 2021

Without making SBP independent, Pakistan will keep facing CAD crisis. IMF should never agree to GOP excuses. Make SBP independent of Govt now!!!

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Desprado Resilient Rajarawal111 miafridi The Sane
 
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NasNY

Chief Minister (5k+ posts)
Only solution for Pakistan debt is collecting taxes.

Rs1,840 [billion] for July/Oct = $10.5 billion.

get collection to $100 billion /per year and we will not need the IMF.

get all motorcycles to electric in 5 years. BAN all Petrol motorcycles.
imports of oil will decrease and we will save more.

we can pay off the debt in 5 years.
 
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arifkarim

Prime Minister (20k+ posts)
Only solution for Pakistan debt is collecting taxes.

Rs1,840 [billion] for July/Oct = $10.5 billion.

get collection to $100 billion /per year and we will not need the IMF.
How many Pakistanis pay taxes in dollars? Pakistan is taking loans to pay dollar debt not local debt
C827268A-BC0E-422E-925B-F581C7A0FCEF.jpeg
1AD8F55C-2567-46A0-A452-A02FD531E833.jpeg
 

The Sane

Chief Minister (5k+ posts)
Only solution for Pakistan debt is collecting taxes.

Rs1,840 [billion] for July/Oct = $10.5 billion.

get collection to $100 billion /per year and we will not need the IMF.

get all motorcycles to electric in 5 years. BAN all Petrol motorcycles.
imports of oil will decrease and we will save more.

we can pay off the debt in 5 years.
For that to happen, Pakistani courts have to be outlawed, who offer breather to every convict and felon in this country.
For EV, Pakistan needs to upgrade its power grid in order to charge vehicles for a population of 25 crore.
 

NasNY

Chief Minister (5k+ posts)
For that to happen, Pakistani courts have to be outlawed, who offer breather to every convict and felon in this country.
For EV, Pakistan needs to upgrade its power grid in order to charge vehicles for a population of 25 crore.
not true ebikes can be charged with solar panels in about 8 hours or less depending a how much a person use it per day.
 

The Sane

Chief Minister (5k+ posts)
not true ebikes can be charged with solar panels in about 8 hours or less depending a how much a person use it per day.
But you didn’t refer to motorbikes only. Also solar panels are still too expensive for anyone who can only afford ebike, and that too on installments.
 

arifkarim

Prime Minister (20k+ posts)
I can teach you economics 101 and dollar exchange rates set in hong kong and how they are related to GDP and what is GDP but it would be a waste of time.
Just Keep on Laughing
Even if Pakistan collected tax to gdp of 50 percent, it still won't be able to pay dollar debt. For that country needs to increase exports, remittances, FDI and tourism
80418380-39E0-453C-B71A-880D16F6E257.jpeg
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NasNY

Chief Minister (5k+ posts)
But you didn’t refer to motorbikes only. Also solar panels are still too expensive for anyone who can only afford ebike, and that too on installments.
I did mention motorcycles, go and check again,

An electric scooter from China cost $450 range of 60-70 KM charge time 8 hours.
solar panel charging system cost approx $100
for appox 550 = 96,000Rs you can have a fuel free scooter.

CD 70 cost 96,000RS and you have to pay for fuel every time you ride.
 

The Sane

Chief Minister (5k+ posts)
I did mention motorcycles, go and check again,

An electric scooter from China cost $450 range of 60-70 KM charge time 8 hours.
solar panel charging system cost approx $100
for appox 550 = 96,000Rs you can have a fuel free scooter.

CD 70 cost 96,000RS and you have to pay for fuel every time you ride.
Yes, you mentioned motorcycles only. I overlooked that.
 

Saboo

Prime Minister (20k+ posts)
Only solution for Pakistan debt is collecting taxes.

Rs1,840 [billion] for July/Oct = $10.5 billion.

get collection to $100 billion /per year and we will not need the IMF.

get all motorcycles to electric in 5 years. BAN all Petrol motorcycles.
imports of oil will decrease and we will save more.

we can pay off the debt in 5 years.
Confiscate all monies stolen from Pakistan by Nawaz and Zardari clan and pay off all debt in one week.
 

Doom1111

Minister (2k+ posts)
It is good if this is passed. Passing will be most difficult job as Asad Umar says that i am against this as it can become Political tool to control Pakistan from West. So Asad Umar has rejected this again and said i will tell PM to not allow to pass this at any cost.
 

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