Infostani Sources- Privatization Minister Fawad Hasan Fawad has disclosed that the International Monetary Fund sought State Bank autonomy to directly access information the federal government hesitated to share with the global lender. Fawad Hasan Fawad’s surprising statement may deepen suspicions surrounding the IMF granting full autonomy to the State Bank in January last year, raising questions about the role of the Governor State Bank Dr. Raza Baqir.
Responding to a query about the banking sector, Federal Minister for Privatization Fawad Hasan Fawad stated that the IMF initially granted autonomy to the State Bank, after which the Governor made the State Bank dependent on him. Now, he is obtaining all the information directly from the bank, which the government of Pakistan had not provided earlier.
Concerns and Questions Surrounding State Bank Autonomy and Economic Policies
He questioned why the IMF and the World Bank don’t demand a reduction in the spread of lending and deposit rates, currently the world’s highest in commercial banks. Fawad added that the Privatization Commission earns only a 4% interest on its $6 billion deposit in the National Bank. Following the amendments, the Ministry of Finance is unaware of the State Bank’s affairs and the IMF, except for the information the Governor of the State Bank personally communicates to the Minister of Finance or the Ministry.
Concerns arose about the amendments in the P Act, with critics fearing a compromise on Pakistan’s economic autonomy. In January 2022, the State Bank gained full autonomy. Granting the governor complete independence in his affairs in exchange for a $1 billion loan tranche.
In 2021, The Express Tribune reported that the finance ministry was under pressure from the central bank administration to accept the amendments. Or else the $1 billion IMF tranche would not be possible. Despite The Express Tribune sending a query to Pir Kaur Zabaqir. Who led the State Bank to autonomy, they did not receive a reply. Baqir, who served for three years, left the country in 2022 after his term ended. Fawad Hasan Fawad stated that the interim government aims to privatize institutions that are challenging for the political government due to potential consequences.
Challenges in PIA Privatization: Insights from Privatization Minister
While the caretaker government is attempting to privatize PIA, it has not succeeded so far. Fawad Hasan revealed that, for the past six weeks, he has faced challenges in building a credible PIA board. Individuals are reluctant to serve on the board for a short period. He mentioned difficulties in arranging loans for PIA, with no success on this front in the last month.
The Privatization Minister revealed that the previous coalition government. In its final days, boards for state-owned enterprises based on political affiliations. This resulted in a politically engaged board lacking experience in addressing complex issues. Fawad Hasan Fawad further stated that the performance of FBR is poor. Also, any solution that increases the size of the government will be detrimental. He pointed out that taxpayers themselves or withholding taxes account for 93 percent of the country’s tax collection. While FBR’s functioning contributes only 7 percent.
The Privatization Minister highlighted that in three years, FBR has issued notices worth 600 billion rupees for recovery. However, the actual recovery from 2013 to 2016 was less than 4 billion rupees. Since 2016, the tax burden on corporate taxpayers has increased by over 40 percent. He emphasized that public sector reforms should encompass bureaucratic and tax system reforms.
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