Wednesday Jan 12, 2022
Federal Minister for Finance Shaukat Tarin has warned of firing the State Bank of Pakistan (SBP) governor from his office if he fails to extend cooperation to the government to achieve growth objectives, The News reported Wednesday.
The government will bring the SBP bill before Parliament for an amendment if the governor SBP doesn't provide it with the necessary support, the publication quoted Tarin as saying during a media briefing flanked by Minister of Energy Hammad Azhar on Tuesday.
"The Parliament is supreme and has the authority to make any amendment in the law. However, we do not believe that there will be any need to remove the Governor SBP from his position."
On the occasion, Energy Minister Hammad Azhar said that the government intends to table the average gas tariff bill in Parliament next week.
He said that the existing slabs would remain intact and no change would be brought to these slabs. With this change in average tariff, the gas prices could go up by 30% but it would be done in a gradual manner comprising many years.
There will be no upward adjustment in gas tariff in one go, he added. He further said that the country possessed gas reservoirs for 10 years and a 30% network was being run on LNG. “After two to three years, the situation will become more difficult,” he admitted and added that there was a need to devise a strategy now so the road map would be finalised to tackle the arising situation.
On this occasion, Minister for Finance Shaukat Tarin hoped that there would be no need for taking any extreme action related to Governor SBP. “We don’t expect that this situation will ever arise,” he added. The federal government would appoint eight members of SBP’s Executive Board — which would be responsible to devise the affairs of the central bank.
He said that the government wanted to make SBP as an autonomous body having full independence to function for devising monetary and exchange rate policies. Tarin said that granting autonomy to the SBP was the demand of the IMF but it was also the manifesto of PTI for providing independence to all state institutions. He dispelled the impression that the SBP would go out of control of the government as the Governor SBP would be appointed by the government and out of 10 members of the Board of Directors, eight members would be selected by the government.
The minister was of the view that the mini-budget known as the Tax Laws Supplementary Bill would not add misery in the lives of the common people of Pakistan as most of the sectors where the GST exemptions were withdrawn, would be provided refunds and input adjustments. The minister said that the mini-budget was aimed to ensure documentation of the economy by removing distortions in the tax system.
He said that the IMF had demanded tax measures of Rs 700 billion but they convinced the IMF to restrict taxation measures to just RS 343 billion. Out of Rs 343 billion taxation measures taken through Tax Law Supplementary Bill, the taxation measures of Rs 280 billion were taken in the shape of input adjustments and refundable and this whole exercise was aimed at documentation of the economy.
There are only Rs71 billion in taxes imposed on luxury goods, he said and added that the government also allocated Rs 33 billion for the provision of subsidy. He said that the government could not backtrack from documenting the economy. He said that the government protected fertiliser, pesticides, tractors, agriculture equipment and provident income from slapping a tax on the IMF demand.
On the SBP’s autonomy, he said that the governments in the past obtained Rs6,000 billion from the central bank having zero interest rate. Prime Minister’s Special Assistant for Health Dr Faisal Sultan told journalists that the new wave of COVID-19 would increase pressure next week but they did not expect a burden on the health system as it had occurred in the past.