Govt gears up for meet­ing IMF con­di­tions

The Pak Banker - - NATIONAL -

Pak­istan has agreed to en­sure a set of pol­icy mea­sures to en­able con­ven­ing of the meet­ing of the ex­ec­u­tive board of the In­ter­na­tional Mon­e­tary Fund (IMF) by mid-Septem­ber for ap­proval of $502 mil­lion dis­burse­ment.

Soon af­ter re­turn from Dubai at­tend­ing the IMF meet­ings, Fi­nance Min­is­ter Ishaq Dar presided over meet­ings in Is­lam­abad even on Sun­day on energy sec­tor, State Bank au­ton­omy, tax ex­pan­sion and pri­vati­sa­tion to meet tar­gets con­sid­ered im­por­tant for the IMF to ap­prove the next tranche. In­formed sources said the gov­ern­ment had as­sured the IMF staff mis­sion in Dubai that it would im­ple­ment cer­tain mea­sures be­fore the board meet­ing. The bid­ding for the pri- vati­sa­tion of Na­tional Power Con­struc­tion Com­pany has been con­vened on Tues­day to meet one of the prior ac­tions.

In a sep­a­rate meet­ing of the cab­i­net com­mit­tee on pri­vati­sa­tion, Mr Dar ap­proved a ref­er­ence price for the sale of NPCC. Some more di­vest­ments would also be ex­pe­dited. Like­wise, a meet­ing of the Na­tional Assem­bly Stand­ing Com­mit­tee on Fi­nance was con­vened on ur­gent ba­sis to ful­fil some of the im­por­tant agenda items. The stand­ing com­mit­tee had be­come dys­func­tional af­ter the de­seat­ing of its chair­man Omar Ayub Khan. The com­mit­tee met on Mon­day night and nom­i­nated Qaiser Ahmed Shaikh tem­po­rary chair­man to hold pro­ceed­ings and meet the tar­get for clear­ance of State Bank of Pak­istan Amend­ment Bill 2015, a condi- tion­al­ity of the IMF pro­gramme.

The fi­nance min­is­ter presided over a se­ries of meet­ings on energy, in­clud­ing one with chair­man and mem­bers of the Na­tional Elec­tric Power Reg­u­la­tory Au­thor­ity, to en­sure a power sec­tor plan to en­sure im­proved re­cov­er­ies from con­sumers to ad­dress stock and flow of power sec­tor dues. A num­ber of de­fi­cien­cies on re­form­ing the power sec­tor have been a stum­bling block to­wards smooth dis­burse­ment of funds from the World Bank, Asian De­vel­op­ment Bank and other lend­ing agen­cies.

The fi­nance min­is­ter also had a meet­ing with US am­bas­sador Richard Ol­son on Mon­day and ex­changed views on re­cent IMF talks and up­com­ing visit of the prime min­is­ter to the US. On the other hand, the IMF res­i­dent mis­sion in Is­lam­abad can­celled a back­ground brief­ing to jour­nal­ists at the eleventh hour with­out as­sign­ing any rea­son.

The NA stand­ing com­mit­tee soon af­ter elect­ing a tem­po­rary chair­man ap­proved the pro­posed State Bank of Pak­istan (Amend­ment) Bill 2015 to set up an in­de­pen­dent mon­e­tary pol­icy com­mit­tee to take crit­i­cal mon­e­tary pol­icy de­ci­sions. Fi­nance Sec­re­tary Dr Waqar Ma­sood said that the gov­ern­ment has re­quested the com­mit­tee for the pas­sage of law be­cause it pro­poses some im­por­tant amend­ments to SBP Act of 1956.

Af­ter the amend­ments, pow­ers would be taken from Ex­ec­u­tive Board of the SBP and del­e­gated to the Mon­e­tary Pol­icy Com­mit­tee to de­ter­mine pol­icy rate and do away with the per­cep­tion of gov­ern­ment in­flu­ence in SBP de­ci­sion with re­spect to pol­icy rate.

SBP Deputy Gover­nor Riaz Ri­azud­din said the to­tal mem­bers of the com­mit­tee would be nine, in­clud­ing gover­nor of SBP, and ma­jor­ity of them would be ex­perts from the pri­vate sec­tor. The pur­pose of amend­ments in the SBP Act 1956 was to bring the ex­ist­ing leg­is­la­tion in con­form­ity with the in­ter­na­tional best prac­tices of a mod­ern cen­tral bank Ac­cord­ing to state­ment of ob­jec­tions, the amend­ments were be­ing pro­posed for the rea­sons be­cause the ex­ist­ing clauses per­tain­ing to share­hold­ers, ex­ec­u­tive com­mit­tee and lo­cal boards were no longer rel­e­vant af­ter var­i­ous amend­ments as well as pro­mul­ga­tion of the Bank (Na­tion­al­i­sa­tion) Act, 1974.

The amend­ment pro­posed that a statu­tory mon­e­tary pol­icy com­mit­tee with ex­ter­nal ex­perts to be ap­pointed by the fed­eral gov­ern­ment will be es­tab­lished, which will be re­spon­si­ble for for­mu­lat­ing, sup­port­ing and rec­om­mend­ing the mon­e­tary pol­icy and tak­ing ap­pro­pri­ate de­ci­sions re­lat­ing to key in­ter­est rates, sup­ply of re­serves, ex­change rate pol­icy and limit and na­ture of ad­vances and loans to the gov­ern­ment. The main ob­ject for in­tro­duc­ing this statu­tory com­mit­tee is to en­able the SBP to per­form its es­sen­tial func­tions in a pro­fes­sional way in a chang­ing and emerg­ing fi­nan­cial en­vi­ron­ment. Con­se­quently var­i­ous sec­tions in the Act have also been amended to se­cure the in­de­pen­dent statu­tory role of the Mon­e­tary Pol­icy Com­mit­tee.

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