The government on Thursday got a breather from the Senate Standing Committee on Finance just a week before the arrival of the International Monetary Fund mission when it approved the long-delayed State Bank of Pakistan (SBP) Amendment Bill 2010.
The in-camera meeting of the committee was held under the chairmanship of Senator Ahmad Ali of the MQM. An official source said Finance Minister Dr Abdul Hafeez Shaikh had met PML-N leader Ishaq Dar in the morning to seek his support for the bill’s passage. The approval of the bill was important, as the government had committed its approval for the current month’s performance benchmark with IMF.
The revised bill is likely to be approved by the Senate before May 2, four days before the arrival of the IMF team. Talking to reporters after the meeting, Senator Haroon Akhtar said the committee approved the bill with an amendment that removed the condition of limiting the government’s borrowing from the central bank at 10 percent of the actual revenue proceeds of the last fiscal year.
However it imposed a new condition that the government would have to zero all the borrowing at the end of every quarter. On failure to clear the liability, the government would have to present a report to parliament. He said the committee extended the time period for reduction in the old debt stock of Rs 1,300 billion from five to eight years. “We have given them more time as reducing the debt stock is not an easy task.”
The committee decided to retain the Monetary and Fiscal Policy Board of the central bank replacing the proposed Monetary Policy Committee. The autonomy to SBP has not worked in last three years. “The central bank should align its monetary policy in line with the government’s fiscal policy”. SBP Governor Shahid Kardar dispelled the impression that the amendments would weaken the autonomy of the central bank.
He said the SBP central board would decide on the limit of the borrowing by assessing ways and means. Senator Haroon Akhtar said the Finance Ministry informed the committee that additional taxation measures undertaken this fiscal year would generate Rs 100 billion in revenues in the next fiscal year.
He said that the members demanded taxing agriculture income and opposed the plans to impose wealth tax, as it resulted in the flight of capital.
