SBP Amendment Bill bars government borrowing from central bank

SBP Amendment Bill

Revised draft of SBP Amendment Bill 2021 has been approved by the federal cabinet that promises complete autonomy to State Bank of Pakistan and bars government completely from central bank borrowing.

The government had long meetings with the IMF officials as the approval of the bill is the precondition of the international Financer for the revival of the stalled bailout programme on January 7. The draft of the bill has been approved by the Cabinet Committee on Legislative Cases (CCLC) on Friday which was circulated for the approval of the federal cabinet. The federal cabinet deferred the approval of the revised SBP Amendment Bill 2021 on Tuesday.

The bill has also been discussed by the newly formed Economic Executive Council (EEC) on Thursday. The Economic Executive Council had done certain changes in the bill which have been approved by the Cabinet Committee on Legislative Cases.

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Now the federal minister for information, Fawad Chaudhry has said that this draft of the bill would again be sent to the CCLC. In the fiscal year 2021-22, SBP planned to pursue a 7-9 percent inflation target but then increased to 9-11 percent. The revised bill focuses more on accountability and balancing of autonomy of the State Bank of Pakistan.

The cabinet was informed on Tuesday that, “The (March) amendments have been reviewed by the Finance Division in consultation with the Law and Justice Division, SBP, and the IMF.”

According to one of the clauses of the revised draft of the bill, SBP will not extend any direct credit to or guarantee any obligations of the government or any government-owned entity, or any other public entity. 

As per one of the clauses of the revised bill, “the governor shall submit an annual report before parliament regarding the achievement of the bank’s objectives, the conduct of monetary policy, state of the economy and the financial system.”

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