Senate panel dissatisfied with statement of senior SBP official

ISLAMABAD: The Senate Standing Committee on Finance has expressed its complete dissatisfaction over the deputy governor State Bank of Pakistan's remarks that the devaluation of rupee against dollar did not have any impact on rising inflationary pressures.

In his briefing on depreciation of the Pakistani rupee and inflation in the country, Deputy Governor State Bank of Pakistan failed to satisfy the Senate Standing Committee on Finance and Revenue, which met here at the Parliament House on Wednesday. The Senate panel was chaired by Senator Talha Mehmood. The Deputy Governor SBP, Syed Murtaza, argued that food, energy prices and increased logistics cost hiked inflation. He said the rupee had appreciated and stood at Rs152, so the inflation did not increase because of devaluation. The committee members grilled the deputy governor SBP for making such remarks before the committee.

On the matter of recoveries claimed by the National Accountability Bureau (NAB) since its inception, the chairman of the committee expressed his intent to invite the Auditor General of Pakistan and Director General Accounts, NAB, to the next meeting.

The deputy governor State Bank told the committee that supply and demand in the market determine the exchange rate. He observed that Covid-19, which was a great shock to the world after the Second World War, was also one of the factors among others due to which the rupee depreciated and inflation was high.

He noted that in some African countries and Latin America, dollar was also showing muscles and inflation was high. Chairman Committee Senator Talha Mehmood said that dollar was being smuggled to Afghanistan due to which the rupee was depreciating.

Senator Sherry Rehman and other senators also took notice of the statement earlier given by the Governor State Bank, Dr Raza Baqir, regarding an increase in dollar value against the Pakistani Rupee. The members of the committee termed the statement “irresponsible” and called for an explanation on the statement given by Raza Baqir.

Sherry Rehman noted that in terms of dollar, international organizations are predicting that it will go up to 200 rupees. The chairman committee lamented that governor SBP is not a political office and he should not make political statements. The standing committee decided to seek a clarification from the governor SBP on the statement.

Senator Anwar-ul-Haq Kakar said that it was the responsibility of SBP to control the fluctuations of rupee. He said that the rupee has depreciated sharply since the arrival of the new governor SBP. Senator Saadia Abbasi asserted that the committee should also be informed about the recent negotiations held with the International Monetary Fund (IMF).

Additional secretary Ministry of Finance said that he could not give a detailed answer in this regard and asked for more time to get details of the negotiations. Senator Musadik Malik asked whether the SBP had not intervened in the value of dollar in the last three years.

He underlined that the value of rupee had waned sharply while exports have increased only by 3pc in the last three years. The members of the committee also expressed their annoyance over the rising inflation in the country.

While acknowledging the interference in fluctuations of rupee, the deputy governor SBP remarked that central banks all over the world intervened in the value of dollar. Chairman Committee Senator Talha Mahmood expressed his intent to call the finance adviser and other officials for a briefing to know the contents of the recent agreement with the IMF.

The chairman committee was of the view that the rupee continued to move down sharply against dollar but exports did not surge. He said that Pakistan had engaged with the IMF 23 times, but was still on the grey list of the financial watchdog, the Financial Action Task Force.

Referring to the recoveries claimed by the National Accountability Bureau, the additional secretary finance stated that so far NAB has recovered Rs821 billion. While answering the question raised by Senator Saleem Mandviwala, the additional secretary of finance responded that it was not known where the recovered money was collected. The money was not being deposited in government accounts. It is not known in which account the NAB had deposited the recoveries of Rs821 billion, he added. The committee members discerned that no one in the country has a record of such a huge amount of money, which is a matter of surprise and concern.

After deliberation, the chairman committee decided to pen a letter to the Auditor General of Pakistan and DG Accounts, NAB, and summoned both the figures to the next meeting of the committee. The chairman committee let out that the amount recovered by NAB would also be audited.

Discussion also took place on the question asked by Senator Walid Iqbal regarding “the rules and policies for postings number of the position of Executive Directors, Directors and representatives from Pakistan at the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank, World Trade Organization, and any international or regional bodies".

Senator Walid Iqbal observed that 74pc of appointments were barely from the Secretariat and Administration Group while no one from Balochistan had been appointed so far. He said that amendments should be made to the rules based on equality.

The chairman of the committee sought details from the additional secretary Economic Division within 10 days regarding the number of appointments that had been made to-date, tenure of the inducted officers, and their relevant expertise and skills and details of the officers seated from each province.