Autonomy of State Bank of Pakistan (SBP) would be beneficial for the economy., as developed countries have independent central banks.These were the views of famous economists and research fellow of Sustainable Development Policy Institute (SDPI) Dr.Sajid Amin Javed on a webinar titled “The Autonomy of State Bank of Pakistan” held by Department of Economics, University of Karachi, hosted by Dr. Safia Minhaj Assistant Professor, Department of Economics, University of Karachi. Attended by more than 100 students.
Dr. Sajid added, SBP must be free from any political influences. Autonomy of SBP has become a debatable issue. Its autonomy is not comparable to the independent level of any other institutions which are under the influence of treasury. However, there is a need for high accountability measures with very strong transparency even after the autonomy shall be granted.
He further emphasized that Governor SBP must be appointed only for one term and in any case the tenure should not be extended. For better result of controlling inflation, SBP should adopt “Integrated Inflation Targeting” instead of standard way of Inflation Targeting.
Effective and well-define coordination between fiscal and monetary policy is the pre requisite to maximize economic performance. Dr.Sajid explained three arguments that have been made against the granting of autonomy to the SBP.
IMF is the only entity that caused this act to be proposed. Which does not hold true. It is although an he said IMF requirement the autonomy decision is on a whole. The degree of independence is however to be evaluated on careful grounds.
Dr.Sajid further said that institutions such as FBR cannot be evaluated on similar grounds as SBP as they hold entirely different functions in the economy.
Dr. Sajid said putting up facts of the three main objectives that are to be achieved:
- Price Stability which is the primary objective
- Financial stability which is the secondary objective and
- Supporting growth which is the tertiary objective
He discussed various mechanisms and proved that only the autonomy of State Bank Of Pakistan will lead to attainment of these objectives.
The session ended off by taking questions from students which were catered marvelously by Dr.Sajid and then a discussion with Dr.Safia Minhaj led to further explanations. All in all was a very informative and interactive session which has contributed in adding value to the thought processes of the students of Economics department, University of Karachi.