The proposed amendment to the SBP Act of 1956 to make SBP sovereign has raised serious questions about the country’s economic outlook, and economists described the excessive sovereignty of SBP as a threat to the country’s integrity.
As noted by many analysts and members of Opposition Political parties, the SBP’s proposal for independence is being interpreted as the transfer of control of the country’s economy to the international financial institutions under the guidance of the International Monetary Fund. On the other hand, economists describe the excessive sovereignty of SBP as a threat to the safety of the country.
Renowned Economists, Kaiser Bengali says that the example of SBP’s proposal for sovereignty in Pakistan is unparalleled in our time. This sovereignty was granted to the Central Bank of Turkey, which led to the collapse of the Ottoman Empire. As a result, the Ottoman Empire collapsed because the government did not have money to spend.
Kaiser Bengali said that the Turkish army did not have the capital to wage war, because even there the central banks had great powers, and the Ottoman Empire could not control internal uprisings due to lack of capital and collapsed.
According to Kaiser Bengali, if the State Bank of Pakistan also became an owner of financial resources, the safety of the country would be in danger. Doesn’t Pakistan have the capital to pay police salaries? He called on all opposition political parties to direct their struggle for the survival of democracy to international financial institutions that wish to preserve their hegemony over Pakistan under the guise of UBP sovereignty.
The economic expert, Dr. Hafeez A. Pasha has also opposed the SBP full autonomy, saying that maintaining the Fiscal and Monetary Policy Coordination Board is essential to Pakistan’s economic stability and safety.
According to Dr. Hafiz Pasha, Bangladesh amended the Central Bank Act in 1972 to make fiscal and credit policy the coordination board, and Pakistan followed the example of Bangladesh in the late 1990s in pursuing national economic goals and policies. To form the SBP, the Monetary and Fiscal Policy Coordination Board was created. Likewise, in India, SBP has government representation on the board of directors, and in Pakistan, a government representative has been removed from SBP’s board of directors.
He said that given the situation Pakistan is facing, SBP cannot have full power or independence. If SBP stops lending to the government, where will defence spending be covered? In 2018, 100% of military expenditure was fulfilled with loans, while 60% of defense spending last year was covered by loans. Pakistan will be a hostage in the name of SBP Sovereignty.
According to Dr. Hafeez Basha, SBP is a national institution committed to implementing government economic policies, and the Treasury and SBP can work together to achieve better results, such as reviving the economy during the Corona epidemic.
He said it is important to control inflation, reduce unemployment, increase income, and maintain the wheel of growth. The most important body for this is the National Economic Council, which carries out economic activities each year. The council formulates a plan, the four provinces are represented and consulted, and the speed at which the country’s economy will develop and the level of inflation that will remain is determined.
Dr. Hafeez Pasha said that the program should be affiliated with the National Economic Council, which is one of the most important economic institutions in the country. The objectives set by this organization must be respected by the SBP and accountable to the SBP or its agent. Just as the Prime Minister of Pakistan obeys the law, why should a governor or any UBP official be excused from responsibility?
Dr. said. Hafez Pasha said that if SBP does not lend to industries and the agricultural sector through financial operations, what will happen to these schemes aimed at stimulating economic activity, increasing exports, and improving agriculture and the construction industry being offered through different concessionary packages.
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