SBP’s vi­sion

Enterprise - - Editor’s desk -

The State Bank of Pak­istan has un­veiled its strate­gic plan, which cov­ers a five-year pe­riod to help fo­cus on key strate­gic pri­or­i­ties which in­clude en­hance­ment and ef­fec­tive­ness of mon­e­tary pol­icy; strength­en­ing of fi­nan­cial sys­tem’s sta­bil­ity; im­proved ef­fi­ciency, ef­fec­tive­ness and fair­ness of the bank­ing sys­tem; in­creased fi­nan­cial in­clu­sion; ef­forts to­wards cre­at­ing a ro­bust pay­ment sys­tem and im­prov­ing the cen­tral bank’s or­ga­ni­za­tional ef­fi­ciency and ef­fec­tive­ness. All these are in­deed laud­able goals. How­ever, just like the past we seem to sac­ri­fice our long-term ob­jec­tives with our im­me­di­ate needs for for­eign cur­rency. Com­pli­ance is forced on us by our lenders rather than will­ing­ness from within. This has been our history as we tend to shelve all our plans and laud­able vi­sion at the drop of a hat for short-term gains.

The SBP Vi­sion 2020 talks about in­creased fi­nan­cial in­clu­sion in the coun­try. With 11 (eleven) per­cent of the cit­i­zens us­ing banks for fi­nan­cial set­tle­ments, as per Na­tional Fi­nan­cial In­clu­sion Strat­egy, we have im­posed a 0.6 per­cent tax on all bank­ing trans­ac­tions for non­fil­ers. Is that the right ap­proach to achiev­ing goals by rais­ing fi­nan­cial in­clu­sion to 50 per­cent over five years? Cer­tainly not. FBR needs to have ac­cess to bring non-fil­ers into the tax net to help doc­u­ment the econ­omy. How­ever, those who have agri in­come only or are de­pen­dent on re­mit­tances from ex­pa­tri­ate Pak­ista­nis, who are legally tax ex­empt, can al­ways re­ply to no­tices re­ceived from tax hounds. How­ever, there should be no el­e­ment of ha­rass­ment and PRAL’s own por­tal needs to be up­dated on a daily ba­sis.

So our im­me­di­ate need to re­duce fis­cal deficit trumps the need to at­tract more Pak­ista­nis to­wards the bank­ing sys­tem as a whole, which we fear may re­sult in low­er­ing the num­ber of bank ac­counts in the coun­try. Sim­i­larly, a le­gal obli­ga­tion im­posed on SBP, by the Supreme Court, is to draw plans and the Vi­sion 2020 also en­vis­ages en­force­ment of an Is­lamic Bank­ing Strate­gic Plan. But do we have a struc­ture in place for this to hap­pen? More sukuk is­suance is needed. But the fed­eral gov­ern­ment, for this to hap­pen, needs to first iden­tify and then of­fer un­en­cum­bered un­der­ly­ing as­sets it owns to the Is­lamic banks as well as com­mer­cial banks hav­ing Is­lamic bank­ing branches. As a re­sult of Min­istry of Fi­nance’s fail­ure in iden­ti­fy­ing these as­sets Is­lamic banks are be­ing forced to place their de­posits in non-Is­lamic com­mer­cial banks, who con­tinue to en­joy a higher re­turn. This is patently un­fair. The sit­u­a­tion has be­come more com­pli­cated - af­ter the pas­sage of the 18th Amend­ment - as prov­inces now own some of the fed­eral as­sets or have a strong say in the mat­ter. So we fail to un­der­stand how SBP will achieve the goal of pro­mot­ing Is­lamic fi­nance.

The SBP is and has been one in­sti­tu­tion on the civil side that en­joys the con­fi­dence and re­spect of the peo­ple; it also en­joys cred­i­bil­ity with in­ter­na­tional lend­ing bod­ies. It is there­fore es­sen­tial for peo­ple in au­thor­ity to re­alise this and sup­port that this con­fi­dence in SBP is not un­der­mined. The fis­cal author­i­ties need to con­sult and hold in high es­teem SBP’s views on eco­nomic mat­ters to ob­tain a bet­ter fu­ture. Thus, the SBP Vi­sion 2020 need not be lost in the noise cre­ated for sake of petty am­bi­tions. The share of Non-Bank Fi­nan­cial In­sti­tu­tions (NBFIs) and Is­lamic banks may be small. But this does not mean that their views and am­bi­tions should be ig­nored or go un­heard. The ac­tion plan for fi­nan­cial in­clu­sion needs to be im­ple­mented and the long-term goals need not be sac­ri­ficed at the al­tar of im­me­di­ate needs. So let us get our pri­or­i­ties right. Se­cu­rity en­vi­ron­ment is im­prov­ing but energy still re­mains an Achilles’ heel or a weak­ness. With­out ad­e­quate, sus­tain­able and af­ford­able sup­ply of energy to all sec­tors of the econ­omy - the Vi­sion 2020 will only re­main a dream and not a re­al­ity which should be our adopted and de­sir­able goal.

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