The government of Pakistan plans to call the managing director of the International Monetary Fund (IMF), to request the official’s intervention to eliminate barriers to the restoration of the $6 billion deal.
According to sources, the proposal came about amid the government’s decision to make some fundamental changes in the approved draft of the State Bank of Pakistan (SBP) Amendment Bill 2021.
As per reports, the government of Pakistan has requested the IMF to allow it to re-introduce more changes in the bill, such as keeping the option of borrowings from the SBP open and retaining the finance secretary on the board of the SBP.
The two biggest blocks hindering the revival of the $6 billion bailout package are the approval of the SBP amendment Bill 2021 and the introduction of the finance bill in the National Assembly.
According to reports, Prime Minister Khan along with the Finance Adviser Shaukat Tarin have discussed the proposal and decided to make a telephone call to IMF Managing Director Kristalina Georgieva.
Answering a question, Shaukat Tarin on Monday said, “There is no need for a telephone call to the managing director of the IMF”.
Mostly, the IMF releases either a statement or tweets regarding the interaction between the leader of a country and the managing director.
Instead, as per reports, the government shared a list of new changes that it wants to make in the SBP Amendment Bill 2021.
The federal cabinet has approved the SBP Bill on March 9, 2021, without reading it.
Earlier last week, Law Minister Farogh Naseem communicated Pakistan’s legal position on the Bill under discussion to the IMF which led to some uproar at the IMF headquarter.
The IMF took some time to understand that some of the changes made in the bill were in fact unconstitutional.
In a major turn of events, after previously agreeing to close the door of borrowing from the central bank, the government has now brought up the retaining of this option in front of the IMF. The law minister explained to the IMF that the federal government has the authority to borrow money under the constitution.
The federal government has not been borrowing any funds from the SBP under the IMF program. However, it is now unwilling to provide a legal cover to this temporary ban, in place since July 2019. According to reports, last week the IMF Mission Chief Ernest Rigo refused to accept this demand.
The ban on borrowing from SBP has left the government at the mercy of commercial banks that have recently been demanding an interest rate that is significantly higher than the key policy rate of 7.25%.
It is expected that the IMF will be providing its final position on the proposed amendments. The government is losing time as it tried to get approval of $1 billion loan tranche by December 17.
The law minister told the IMF last week, about the federal cabinet-approved clauses that attempt to give absolute autonomy without accountability but are unconstitutional provisions.
These clauses are pertaining to a mechanism for the SBP governor’s removal, allowing him to appear before parliament by bypassing Finance Division, providing absolute immunity to the governor, and others from all kinds of investigation, and limiting parliament’s powers to amend the SBP law in the future.
