Self-defeating absolute autonomy to SBP
WITH approval of SBP Amendment Bill 2021 by the Federal Cabinet, it is hard to sit back in peace.
Instantly a chilling train of misgivings about it sets in, not as a consequence of some cynical disposition or pessimism of some sort but rather, it triggers from earlier baneful experiences of institutional autonomy.
We made the judiciary, NAB and ECP independent but instead of putting their house in order and work for the larger good of the country, they work leisurely and insensitively.
They also work divergently which somehow, feed those who ransacked this country constitutionally, institutionally, financially, morally and socially beyond measure.
The judiciary provides justice to them supersonically, suiting to their convenience. Under NAB, their cases of mega corruption remain abortive.
The blatant conduct of ECP at Daska by-election/Senate elections clearly manifests their bias and preference.
The tale of other independent regulators; NEPRA, PEMRA and OGRA is no less different.
Under 18th Constitutional Amendment, we accorded provincial autonomy which also turned out to be all pain and no gain.
It has atrophied Center financially and functionally and the provincial government could take potshots at its will to the detriment of people and country. Under its shadows, the country looks more of a Confederation than Federation.
The economic hub of the country – Karachi – is decaying unrelentingly but under this infamous amendment, no one could interfere in Sindh to prevent the rot. It is a tyranny under the aegis of the Constitution.
Probably, undeterred with such a sorry state of affairs, we are all set to embark upon a soft but risky option of conceding absolute autonomy to SBP to satisfy a precondition of IMF for revival of its $6 Billion programme.
Under amendment bill, domestic price stability is the primary objective of SBP while relegating its role of supporting economic policies as of a tertiary objective.
It will have freedom to determine and implement monetary and exchange rate policies. It has also been invested with full authority to acquire, hold and dispose of any movable/immovable property.
Neither NAB/FIA could investigate the functioning of its officials nor could government initiate accountability if a bank fails to fulfill its mandate rather, in future, even government cannot legislate to effect any change without consulting its Governor.
The service terms and conditions of its Governor/Deputy Governor are also beyond the purview of government.
As already mentioned above, instead of rendering some fruition, all institutions invested with autonomy have become a nuisance. SBP is also unlikely to conduct itself differently.
It would work identically because the existing environment, mindset and mechanism are the same. Its analysis may make a forbidding reading.
It is generally said that we need institutions to run the country. Yes, it is true but first we need people who could make institutions.
In our case, the overwhelming majority of available people is dishonest and inept and are ever ready to sell their souls to the devil for a full set or a set of cufflinks depending upon the situation.
Rest are sitting on sidelines and no worthwhile effort is afoot as before to bring them to fore.
Resultantly, high ranking positions/board of members of institutions are packed with unsavory, timid and flexible characters thus, blissful side of making institutions independent is conspicuously absent and nightmare continues to haunt us unabated.It is a known fact that we are making SBP autonomous under IMF’s diktat.
On the outset, this conditionality undermines rationality of having an independent Central Bank. IMF is a tool of big super powers who subjugate nations through insupportable debt.
During the last decade, it laid a debt trap and now it is up to suck us dry. It is too naive to expect altruism from them.
The cry of “Independent Central Bank” ’ is prose and poetry of present times and is too fascinating but as always, the devil lies in detail. We are at a nascent stage of democracy but our nemeses including our ruling elite and pseudo intellectuals want us to stand at its vertex.
No matter how angular we may be. Underlying purpose is to squeeze us hard because democracy extracts cost before it attains maturity.
Contrarily, we need baby steps to digest entire process properly at lesser cost.Anything which is more than our necessity is poison, said Rumi.
Our appetite for a perfect democratic system is far less than dozes being administered to us. The 18th amendment and now absolute autonomy to SBP are examples of such kind.
Apart from strong arm tactics being employed by the IMF, it is also said that insanity has infected all central banks of the world.
In case of Pakistan, it may be too crude and awesome thus, prudence calls for deep introspection to arrive at a viable course of action. The SBP holds and controls the national purse.
By its implications, it is an ultimate arbiter of all industry and commerce in the country thus, we need to tailor its autonomy according to our environment.
Conversely, we may sign away our sovereignty. The IMF may crank up pressure if it finds our response to the contrary. This is a certain proposition and needs to be tackled with.
We cannot rid ourselves of IMF yoke until we earn enough to retire the debt. This is how we can get out of its morass. Before we start doing this, we need time and money.
No orthodox approach would yield rather, may crippled us irrecoverably. It is our strategic location in contest of a great game which may do the trick.
The US and China are the contender. One has the money and other has the leverage over the IMF. How we do it with a finesse. It is a test of our diplomacy.
— The writer, a retired Lt Col, is a senior columnist based in Islamabad.