



The government has managed to get an important piece of legislation passed from parliament that empowers the State Bank of Pakistan (SBP) to take crucial decisions independently pertaining to interest rates, foreign currency reserves, exchange rate, limit and nature of advances and loans to the government.





It tabled “The State Bank of Pakistan (Amendment) Bill 2015” in the National Assembly on Thursday in the absence of opposition legislators as they staged a walkout in protest against the attitude of cabinet members, who, according to them, were not taking the house business seriously.The new law paved the way for setting up a statutory monetary policy committee that would take monetary policy decisions independently and without any interference.“A statutory monetary policy committee, with external experts to be appointed by the federal government, has been established, which will be responsible to formulate, support and recommend the monetary policy,” said the bill.When the leader of opposition, Syed Khursheed Shah of Pakistan Peoples Party, after censuring government’s ministers for their indifferent attitude, left the floor with other members of opposition parties, Deputy Speaker Javed Abbasi presented the bill, though the required number of lawmakers was not present.The lack of interest in the legislative business on the part of lawmakers was evident from their absence from the lower house of parliament.The statutory committee will enable the central bank to perform its essential functions in a professional way in a changing financial environment.“An enabling clause allowing the SBP to establish a depositor’s protection fund has been introduced. A draft law for the fund is already under consideration of the government whereby the fund will be a subsidiary of the SBP,” said the bill.It also empowers the SBP to take enforcement actions including imposition and collection of pecuniary penalties on legal and natural persons for contravention of the law.“A new section about the lender of last report has been introduced in the Act for troubled banks. Another new section about regulatory powers has been introduced in order to provide explicit powers to the SBP for issuing directives, imposing and recovering a penalty, which is already being exercised by the SBP under the Banking Companies Ordinance 1962,” it added.From now on, the SBP’s central board will submit a quarterly report to parliament on the state of economy with special reference to economic growth, money supply, credit, balance of payments and price development.Published in The Express Tribune, August 14, 2015.