SBP should act as autonomous body, answerable to parliament: Abid Sulehri
LAHORE: Executive Director Sustainable Development Policy Institute Dr Abid Sulehri Thursday said that the.
While giving briefing to the Lahore Economic Journalists Association on Understanding Social Implications of Monetary Policy in Pakistan Sajid said that central bank should operate independently through its schemes and policies. The policy should be treated as the public policy, and there should be not be any political intervention in the business of the State Bank of Pakistan.
The session was attended by Country Director by Friedrich Ebert Stiftung Dr. Jochen Hippler and President Leja Sudhir Chaudhry. Dr. Sajid Amin Javed said that Research fellow “The public sector institution should be autonomous which could operate independently through its schemes and policies targeting the welfare of the public,” he said.
He provided very insightful findings about the social implications of the monetary policy of State Bank to the audience comprising of economic journalists.
Dr. Sajid highlighted the fact that it’s the lack of awareness and financial literacy among people that they cannot foresee the anchorage expectations of the SBP and therefore the pressures of inflations are increasing day by day.
He suggested that the SBP should follow a specific indicator for reporting the inflation rate and emphasized upon the accountability of the designated autonomy to the SBP.
Dr Sajid pointed out that there was a lack of gender balance in the SBP’s decision making forums. The purpose is to highlight the issues and not the SBP but to strengthen its status and scope of work.
While sharing the recommendations with the economic journalists Sajid said that SBP must deliver on price stability to ensure progress on development agenda of the country and welfare of the public. The SBP has been delivering on always changing inflation target set by government, and not on price stability. It led to continued eroding purchasing power of the people.
The excuse that inflation is supply side needs to go. It distorts a lack of accountability. It will require targeting inflation target which is least affected by supply side drivers. SBP must also develop data and capacity to debunk the composition of the inflation in country.
Monetary policy must have qualifiable targets, which can be traced and measured. Targets under each objective of the SBP must be directly quantifiable and penned down in black and white through secondary legislation. It is recommended that SBP must improve communications and really invest in its communication capacity in order to reach to public at large.
Monetary policy statement (MPS) needs a fundamental change. Going beyond macro mantra of CAD, trade balance, the MPS must communicate side effects of its decisions to general public and government. SBP must expand its research agenda. Present research agenda of central banking and monetary, within and outside SBP, shows a clear distancing from the issues of public policy facing the general public.
SBP must take a lead on expanding research agenda and collaborations with academia, development sector, particular policy think tanks . The SBP needs to enhance its interaction with civil society, think tanks, and academia. SBP is considered to be the least engaging public office in Pakistan. It ends to set its research agenda in isolation from the public at large, as well as from issues of public policy. This perception needs to go.
Sajid also recommended that decision-making in the SBP needs to be more participatory and gender balanced.
SBP, must take steps to ensure greater diversity and gender balance in the composition of the Board of directors, Governors and Monetary Policy Committee (MPC).
SBP must make use of its existing infrastructure and organisation structure to promote and integrate social footprint of monetary policy .
There is great potential for making defective use of SBP’s infrastructure.
He said IMF’s recent work, find a case for central bankers to take inequality specifically into account when conducting monetary policy. Social implications of monetary policy, therefor, must factor into SBP’s decisions and actions.
Sajid said that SBP should work to expand its research agenda to explore monetary policy and inequality inter-relations and calibrate decisions making process to refine monetary policy actions and instruments accordingly. Press Release