Abstaining senators allow SBP bill to sail through

ISLAMABAD: The government Friday managed to get through the Senate the ‘controversial’ State Bank of Pakistan Amendment Bill by a majority of 43 votes to 42 of opposition, leaving the fuming opposition senators in utter disbelief, who called it a bulldozed legislation and a direct threat to Pak sovereignty and national security.

The IMF Board will now consider Pakistan’s case to accomplish the Sixth Review and release of $1 billion tranche under the Extended Fund Facility (EFF). The IMF Board had extended the scheduled meeting thrice on the request made by Pakistan.

Opposition lawmakers, who gathered before the dais of Senate chairman, and some of them tore apart agenda copies and flew them in the air, shouted slogans against the government and the “IMF-dictated legislation.”

In their note of dissent, the opposition said the defence budget will be affected while Pakistan’s nuclear assets and their funding will come under strain. Likewise, they noted, there will be one account for defence expenditure in the SBP, which will be under scrutiny of IMF and as a consequence, US and India will have oversight over defence projects through the SBP i.e. ‘IMF controlled bank’.

After the Question-Hour, some opposition legislators, who came close to the chair’s dais, urged him to take up the SBP bill, listed on No4 on the orders of the day. However, the government showed no interest, sensing the opposition at that time was in majority. Finance Minister Shaukat Tarin, who was present in the House, also went away. The chair had to suspend the proceedings for 30 minutes.

It is understood the late night inclusion of the bill in the orders of the day played a critical part, as Leader of Opposition Yusuf Raza Gilani, who was in Multan, could not make it to the session. Though the opposition commands decisive majority in the House, besides Gilani, PMLN’s Senator Mushahid Hussain Sayed was on leave, down reportedly with Covid while Nuzhat Sadiq was presently in Canada.

Moreover, ANP Senator from Balochistan Umer Farooq, who was seen in the House, was not around during voting. Needless to say, the total number of members of the Senate is 99 but 86 members were present in the House at the critical moments of the sitting. The independent group, led by Dilawar Khan, also voted for the bill despite the fact, Hidayatullah and Hilal-ur-Rehman were also not present during the proceedings.

Likewise, the treasury members, including Faisal Sabzwari and Khaleda Ateeb of MQM were also absent from the meeting, besides Qasim Ranjho and Sikandar Mendhro did not attend the sitting: PkMAP's Shafiq Tareen and Naseema Ehsan, both from Balochistan were also not present in the House.

Opposition JUIF Senator Talha Mahmood did not attend the sitting while PTI's Dr Zarqa Taimur made it to the House despite poor health. The adoption of the SBP bill, already passed by the National Assembly, is the second key legislation with reference to the IMF loan facility, as already the government got passed the Supplementary Finance Bill.

Finance Minister sought leave to move the motion for introduction of the bill and there was a tie of 43 members between the government and opposition benches and still, the chair allowed him to do so, triggering massive protest from the opposition senators.

However, when the bill was moved for clause by clause approval, the opposition was reduced by one member and this enabled the government to secure its approval from the House by a majority of one vote.

Opposition senators had insisted on the bill’s referral to the House standing committee for consideration and report. Leader of the House Dr. Shahzad Waseem, however, urged that the bill should be taken up for voting straight away in view of urgency.

After the chair adjourned the House for 30 minutes and even after that the government sought more time and finance minister was also around, State Minister Ali Muhammad Khan was asked to go and bring him to the House.

Ex-chairman Senate and PPP Senator Farooq H Naek rose when the government appeared evasive to table the bill and urged Senate Chairman Sadiq Sanjrani, “for God’s sake, you too accord respect to this House and don’t breach its sanctity. What is happening right now, I have not seen throughout my life in the Parliament’s history. If the minister is not here, please adjourn the House, I appeal to you and give ruling that the bill not be on the agenda for at least a month”.

“You have made fun of this House the world is laughing at us,” he remarked. PPP parliamentary leader Sherry Rehman congratulated the joint opposition on defeating the government and preventing it from tabling the bill in the House, which would undermine Pakistan’s sovereignty and the economy would also be mortgaged. “What spectacle, drama they have made of the Parliament. Please let them bring this bill on the agenda, as they are again and again calling for the House adjournment. Please conclude the day’s business now,” she said.

She claimed that everything was made obvious and the government had been defeated in bringing the bill. PPP Senator Mustafa Nawaz Khokhar was, earlier, on his feet of assert that the government was non-serious and sought adjournment again and again and they want the House to wait so that they could ensure enough members in the House.

“This is an insult of the entire House and the chair as well. And Mr Chairman, you too, appear facilitating them. Ask them to present the bill now in the next sitting and you can say the bill stands withdrawn,” he said. To this, the chair denied having playing the role of facilitator.

Leader of the House Dr Shahzad Waseem questioned how the sitting be adjourned when the bill was on the agenda and sought reference of law and the rules on this count. “The opposition has made the House a joke and are trying to coerce and put pressure on the chair and trying to make the chair controversial,” he asserted.

Federal Minister Senator Syed Shibli Faraz expressed solidarity with MQM and strongly condemned what he called the Sindh government’s violence on men, women and children, reminding the Model Town tragedy. He held the past regimes responsible for this legislation, as they had looted the country’s resources. He said the opposition should apologise for their shameful act.

Former chairman Senate Mian Raza Rabbani of PPP said that this thing was now quite obvious that this document of financial surrender. However, the senator could not complete, as despite chair’s request, another PPP Senator Behramand Tangi shouting at the top of his voice and in the meantime, the finance minister returned to the House and moved the bill.

PMLN Senator Irfan Siddiqui, talking to media at the Parliament House, later, said that those who bulldozed the SBP bill have compromised their independence and sovereignty. “They should be ashamed instead of being happy or proud. The House was held hostage for two hours to complete the official count and was labeled wait.

The rulers who made big claims have put SBP in the feet of IMF for a few bucks. The government and its allies have never been able to wash this stain of blame on their faces,” he said. Replying to a question, the PMLN senator said that it was incomprehensible that Leader of the Opposition Yusuf Raza Gilani was not present in the House. Eight members of the opposition, including him, did not appear in the House today.

The passage of both the ‘controversial’ Supplementary Finance Bill 2021, known as the Money Budget, and the SBP Amendment Bill, is necessary to ensure that the sixth review of the country's $ 6 billion expansion fund facility is approved by the IMF Executive Board.

The State Bank of Pakistan Amendment Bill 2021 will make the central bank fully autonomous and will impose a complete ban on government borrowing from the central bank. However, the government will be able to borrow from commercial banks at market rate. Private banks are believed to benefit from this arrangement.

The joint opposition issued a note of dissent on the SBP Amendment Bill 2022. It pointed out that the State Bank of Pakistan (Amendment) Bill 2022, as passed by the National Assembly, was transmitted to the Senate Secretariat. It is disappointing to note that such an important bill was put in the Orders of the Day under the cloak of darkness in the late hours of the night. Bypassing Procedures and the Rules of Business, when important legislation is to be taken up has become a practice of this government. This Note of Dissent is divided into two sections, namely, Lacunas in the Bill and Political and National Security Implications.

That, the bill has yet not become law and the State Bank has issued a Notification, requiring commercial banks to consider the possibility of default on government loans while making their loan allocations. This is a very serious situation and can have consequences for immediate mobilisation in matters of national security. It is also very alarming that the central bank, which is always the lender of last resort will no longer be able to mobilise the funds needed in times of crisis, nor will the government’s ability to issue sovereign guarantees, listed as contingent liabilities, be possible.

Lacunas in the Bill

1. In Pakistan, SBP’s role was first defined in the State Bank of Pakistan Act 1956.

(i) Major amendments in the SBP Act came in 1994, 1997, 2012 & 2015. Under the existing Act, 1956, there is limited government borrowing (i.e. zero net quarterly borrowing) but now it is proposed that there would be no new government borrowing from the SBP. There will be a complete ban on government borrowing.

2. The amendments propose that the quasi fiscal operation defined as monetary action taken on behalf of the government would be discontinued, however, re financing facilities/ SBP has used to support to access to credit in underserved sector are still allowed.

3. The amendments propose to increase the tenure of the SBP governor from three years to five years having two terms.

(i) It is also proposed that pay of the governor would be Rs15 million per month.

(ii) There would be two deputy governors of SBP with similar perks.

4. The amendments propose to establish an Executive Committee to make policy decisions related to Bank’s core functions as well as administration and management matters. The committee shall consist of the governor, deputy governors, executive director and other officers as needed.

(i) Only governor and deputy governors have the right to vote.

5. The amendments propose to have 54 amendments including 10 new sections that have been introduced to SBP Act 1956.

6. The amendments propose that the Central Bank will continue to support government policies from economic growth as far as this support does not undermine its primary objective and financial stability.

7. The amendments propose, that the finance secretary as a non-voting member of the Board of Directors.

(i) Deputy governor will have the right to attend Board meetings but not right to vote.

(ii) The governor or government can appoint/ designate an acting governor in his/ her absence.

(iii) The governor shall be chairperson of the Board.

8. The amendments propose the SBP will not extend the direct credits to or guarantee any obligations of the government or any government entity or any other public entity.

9. The amendments propose the SBP shall not purchase government sureties – debt instruments that the government sells to fund its daily operations and special infrastructure or military projects – in the primary market where securities first created and issued.

10. The amendments propose that the SBP governor and its non-executive director will be appointed by the president on the federal government’s recommendation after taking into account the criteria laid down in the Act.

(i) The deputy governor will be appointed by the federal government after consultation between the finance minister and the SBP governor.

(ii) They will be appointed from a panel of 3 candidates recommended by the governor for each vacant post in order of merit.

(iii) Similarly, External Members of the Monitory Policy Committee will be appointed by the federal government on recommendation by the SBP Board.

11. The amendments propose, to provide immunity to the SBP governor, deputy governor, directors of the Board, including the sitting directors or those who have completed their terms or retired, from accountability watchdog, NAB and Federal Investigation Agency.

Political and National Security Implications

12. The sum total of the proposed amendments is that the financial control of the federal government will be lost, as a consequence of which;

(i) CPEC will be affected.

(ii) Foreign policy and relationship with neighbors will go under strain.

(iii) Defence budget will be affected.

(iv) Pakistan’s nuclear assets and their funding will come under strain.

(v) There will be one account for defence expenditure in the SBP, which will be under scrutiny of IMF.

13. As a consequence, the US and India will have oversight over defence projects through SBP i.e. IMF controlled bank.

14. The sum total of the amendments, in the overall context is to subject Pakistan to financial colonialism.

(i) Other elements of Pakistan’s national power are already under US scrutiny, now finance will also be Pakistan will become the worst example of modern day colonialism.

(ii) This is a document of “financial surrender”.

(iii) This is a document that brings Pakistan’s national security and assets under severe strain and scrutiny of international financial imperialists.

PPP parliamentary leader in the Senate, Senator Sherry Rehman while talking to journalists, afterwards, said, “Today marks a black day in Pakistan’s history, as the SBP Amendment Bill was bulldozed in the Senate despite the vehement protests from the joint opposition. The PTI government has refused to follow democratic norms and has turned the Parliament into a circus by bulldozing a bill using condemnable tactics that had not been witnessed in Pakistan’s history until today and have disparaged parliamentary tradition”.

“They had to call for votes twice as they had failed to get enough numbers to pass the bill at the first attempt. They adjourned the meeting and in a categorically reprehensible move, the government asked members currently suffering from Covid-19 to come out, whilst being oxygenated, to get enough numbers to bulldoze the bill through. Alongside completely disregarding parliamentary norms, this government gave the exact same regard to Covid-19 SOPs to push their catastrophic agenda forward,” she alleged.

This bill, she claimed, is a direct threat to Pakistan’s sovereignty and national security; it will ensure that the lender of last resort is unable to take Pakistan out of any future crisis. Central banks are autonomous only to the extent they make monetary policy. It seems PTI has borrowed so much in its three and a half years term that commercial banks will become the only lenders. What will happen to the SBP, lender of last resort when crisis looms? What will happen to the government’s ability to put down sovereign guarantees in big projects? These are listed as contingent liabilities, which is debt, so the IMF can now overrule even these. Such terms are unheard of and totally rejected by the joint opposition.

“The government has no plan or pathway to ensure a safe passage outside of the perilous hole of debt they have put this country in. Pakistan’s current public debt stands at a whopping Rs50.5 trillion and the PTI cronies have failed to reduce spending and continue to indulge in their lavish lifestyles at the detriment of the hard-working taxpayers and the ballooning public debt. Why has the government not shut down the helicopter from Bani Gala and reduced expenses,” she asked.

She pointed out that they had only received the agenda of the Senate meeting after midnight: another card out of the deck of cowardly politics that this government continuously utilises.

After three and a half years of disastrous economic policies that have brought the country to its knees, the government has now bulldozed a black bill in Pakistan through the means of undemocratic tactics. The opposition condemns any bill that seeks to sell Pakistan's sovereignty off to the IMF.

Meanwhile, Minister for Information and Broadcasting Chaudhry Fawad Hussain said that it was another day of victory for the government after successful passage of the SBP Bill.

In a tweet, referring to the passage of SBP Amendment bill in Senate, he said that the opposition had been dreaming of no-confidence motion but it failed even in the Upper House where it had a so-called majority.

The government had proved all the political parties have no worth in front of Imran Khan. He said with the grace of Allah Almighty the journey of success will not stop.