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Financial secrecy must be retained

Financial secrecy must be retained


According to newspaper reports, the State Bank of Pakistan has signed a technical cooperation agreement with the World Bank to achieve six strategic goals which the bank has set for 2020. With signing of the agreement, nothing has been said about the possible leakage of financial information of the country. In a situation when the successive governments in Islamabad have signed pacts after pacts to get loans and assistance from the world donor agencies, it is hard to imagine that anything such as financial secrecy will be kept intact at any stage or any level. The State Bank is proud of being the first financial institution in South Asia to sign such a deal with Reimbursable Advisory Services of the World Bank. Reports suggest that the State Bank strategic plan has been framed and built around for five years to resolve the strategically important issues facing the country’s economy and the financial sector. The finance minister’s team has been proudly repeating the mantra of achieving financial stability, but this kind of agreement shows the government has to go a long way to stabilize the financial sector and face the internal and external challenges confronting the national economy.

The financial management is key to launch development projects and maintain debt servicing against rising volume of loans. But the imprudent policies have curtailed the tax collections base instead of increasing the tax net. The policies introduced during the last financial year, in which withholding tax was imposed on banking transactions and this year imposition of withholding tax in real estate sector, would curtail not only the tax collections but also tax base. The vibrant real estate sector which supports over 80 industries is now under pressure one way or the other and the government will not be able to recover the financial losses in terms of duties and taxes. If 80 industries lower their production capacity, obviously it will put negatively impact on tax generations. It is yet to be seen who persuade the finance minister to introduce these kinds of policies at a time the business and industry of the country were not prepared for it. Putting the entire industrial sector in crisis is great disservice to the nation. The current agreement signed by the State Bank will cover six strategic goals to enhance monetary policy, strengthen financial stability, improve efficiency, streamline the banking system, increase financial inclusion, develop a robust payment system and strengthen the bank’s organizational efficiency.

The government must take the security risks in mind before signing agreements for the country’s financial management and administration. Pakistan is already facing terrorism from India and free flow of financial information should not be allowed to harm the national interests.