Islamabad November 17, 2021: Pakistan approved a bill that will pave the way for increasing the central bank’s autonomy, bringing it a step closer to revive a $6 billion International Monetary Fund loan as reported by bloomberg.
Lawmakers loyal to Prime Minister Imran Khan voted in favor of the bill — the Banking Services Corporation (Amendment) Bill, 2021 — in a joint meeting of the parliament’s upper and lower houses Wednesday, according to state broadcaster Pakistan Television. The bill seeks to reduce the Finance Ministry’s oversight of the State Bank of Pakistan by removing its nominee on the central bank’s board.
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The passage of the bill helps the government clear a hurdle toward a deal with the IMF for resuming the extended fund facility. The loan is a necessary cushion for the South Asian economy, which has seen imports swell as it emerges from Covid-induced disruptions and inflation surge to the fastest in Asia.
That’s weighed on the rupee, which is Asia’s worst-performer in the past six months.
The central bank amendment that gives the government less influence is one of the prior actions that needs to be addressed for the loan to be approved, according to Finance Minister Shaukat Tarin.