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Event Title: Senate Standing Committee on Finance, Revenue and Economic Affairs Chaired by Senator Talha Mahmood

Event Date: 2021-11-03

In his briefing on depreciation of the Pakistani rupee and Inflation in the country, Deputy Governor State Bank failed to satisfy the Senate Standing Committee on Finance, Revenue and Economic Affairs which met here at the Parliament House on Wednesday. The Committee was Chaired by Senator Talha Mehmood.

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

The Deputy Governor State Bank of Pakistan (SBP) briefed the committee on the devaluation of the Pakistani rupee and inflation in the country.  The Deputy Governor State Bank apprised 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 amongst others due to which the rupee depreciated and inflation was high. He noted that in some African countries and Latin America the Dollar was also showing muscles and the inflation was high. Chairman Committee Senator Talha Mahmood 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 given by the Governor State Bank, Mr Raza Baqir regarding an increase in dollar values against Pakistani Rupee. The members committee termed the statement “irresponsible” and called for an explanation on the statement given by Raza Baqir. Sherry noted that in terms of the 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 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 the 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 the dollar in the last three years.  He underlined that the value of the Rupee had waned sharply while the exports have increased only by 3% 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 the fluctuations of the rupee, the Deputy Governor State remarked that central banks all over the world intervene in the value of the 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 mark down sharply against the dollar but exports did not surge. He said that Pakistan had engaged with the IMF twenty-three 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 informed that so far NAB has recovered Rs 821 billion. While answering the question raised by Senator Saleem Mandviwala, the Additional Secretary 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 deposited the recovery of Rs 821 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 in the next meeting of the Committee. The Chairman Committee let out that the amount recovered by NAB would also be audited.

The discussion also took place on the question No.39-D, 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, Economic organization, World Trade Organization and any international or regional bodies. Senator Walid Iqbal observed that 74% of appointments were barely from the Secretariat and Administration Group while no one from Balochistan has 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 ten 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.

The chairman of the committee recessed the public petition number PP-3910 due to the non-participation of DG Customs and disposed of the public petition number PP-3922 without any proceedings. Chairman Committee informed the committee that the petitioner has refused to appear before the committee.

Briefing on the legal status of FBR’s May 2019 instructions to Chief Commissioners not to attach bank accounts of taxpayers without giving prior notice to CEO/owners was also deferred till the next meeting. At the request of the Ex-Chairman FBR, Shabbar Zaida, he will brief the committee on the issue, Mandviwala informed. The Chairman Committee decided to call  Shabbar Zaidi in the upcoming meeting to brief the committee members on the subject.

The chairman committee also summoned the Commissioner appeal Khyber Pakhtunkhwa in the next meeting. The chairman of the committee said that the commissioners of all the provinces would be called to the committee to know the details and issues regarding such appeals. The Chairman Committee sought a detailed report from FBR officials on issues pertaining to such appeals.

 

Briefing by the Ministry of Finance on “Hot Money” and its impact on Pakistan’s economy was deferred till the next meeting for detailed discussion. The matter regarding NBP Fullerton Asset Management Limited ( NAFA ) Company, illegally using the name of Government’s National Bank of Pakistan the Security and Exchange Commission of Pakistan (SECP) apprised the committee. Senator Saleem Mandviwala put forwarded the matter and said that investors have lost Millions of Rupees in this fund and is discrediting Pakistan. After a discussion, the Chairman Committee disposed of the matter with some recommendations. The Chairman Committee also sought a detailed report from the concerned authorities within ten days.

Senator Saleem Mandviwala, Senator Sherry Rehman, Senator Kamil Ali Agha, Senator Musadik Malik, Senator Anwaar-ul-Haq Kakar, Senator Saadia Abbasi and Senator Faisal Sabzwari attended the meeting while Senator Walid Iqbal participated as a mover. Additional Secretory Finance Division, Additional Secretory  Economic Division, officials from SECP, FBR were also part of the meeting.