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Prime Minister Shehbaz Sharif's government remains undecided on two critical policy matters – whether to allow dual nationals to hold key positions in the State Bank of Pakistan (SBP) and whether to impose a carbon levy to curb emissions. The government on Tuesday once again deferred decisions on both issues in two separate back-to-back meetings – one chaired by the prime minister and the other by Deputy Prime Minister Ishaq Dar. During the cabinet meeting, PM Shehbaz, for the third consecutive time, postponed a decision on allowing dual nationals to hold the positions of governor, deputy governors and directors at the SBP. Earlier in the day, Deputy PM Dar presided over another inconclusive meeting on the carbon levy. However, key government officials told The Express Tribune that there is a strong push within the government to increase the existing petroleum levy rate of Rs60 per litre to offset part of the upcoming reduction in diesel and petrol prices. Under the current law, the petroleum levy on high-speed diesel and petrol can be raised to Rs70 per litre. A Rs10 per litre increase would generate an additional Rs15 billion per month for the government, which is struggling with huge revenue shortfalls. The International Monetary Fund (IMF) has also proposed introducing a carbon levy of Rs10 per litre over three years, beginning with Rs3 per litre in the first year. This levy is part of the IMF's conditions for the new $1 billion Climate Resilience Facility, which Pakistan is currently negotiating. According to sources, the government is considering both the carbon levy and an increase in the petroleum levy simultaneously. On Monday, the prime minister chaired a meeting on the matter but reached no decision. He subsequently referred the issue to Ishaq Dar, who led another meeting on Tuesday, where discussions remained inconclusive. The primary point of contention was the utilisation of the levy proceeds, sources said. The sources said that the climate change ministry wanted the proceeds of the levy to mitigate the climate impact. However, another view suggests using the proceeds to offset the financial impact of reducing sales tax on electricity bills from 18% to 10%. Moreover, concerns have also been raised that Pakistan may, in the future, be affected by the European Union's Carbon Border Adjustment Mechanism (CBAM), which imposes pricing measures on carbon-intensive imported goods. Besides, imposing a carbon levy on coal remains a challenge as it falls under provincial jurisdiction. Dual nationals Meanwhile, for the third time, Prime Minister Shehbaz Sharif blocked the finance ministry's proposal to allow dual nationals to be appointed as governors, deputy governors and members of the Monetary Policy Committee of the SBP. During the cabinet meeting, the prime minister stated that he would hold a separate discussion on the matter and would not approve it immediately. Previously, a cabinet committee had unanimously recommended making dual nationals eligible for these positions. However, the federal cabinet recently deferred approval of the State Bank of Pakistan Amendment Bill 2024. According to sources, during the last cabinet meeting, the prime minister expressed reservations about relaxing the legal ban on appointing dual nationals to key SBP positions. Under existing laws, dual nationals are barred from becoming members of Parliament, and in 2022, a similar restriction was imposed on the SBP's management and policy-making positions. The cabinet committee had proposed deleting Section 13-A of the SBP Act, which was then presented before the cabinet last week. Section 13-A states that no one can become the governor, deputy governor, director, or member of the SBP if he or she "is a member of Parliament or a provincial assembly, or a local government or has dual nationality." This restriction on dual nationals was initially imposed in January 2022 following broad amendments to the SBP Act influenced by the IMF and the preferences of the former governor. The new amendment proposes removing the term "having dual nationality" from this section, effectively lifting the restriction. One of the SBP's former deputy governors, Dr Inayat Husain, is a dual national who completed his term on November 8. Given his experience and significant role within the SBP, the government was interested in retaining him for a new five-year term.
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