ISLAMABAD: The IMF has asked Pakistan to remove the finance secretary from the central bank’s board and also recommended amending another law to revoke the federal government’s authority to order inspections of commercial banks, a media report said on Tuesday.
The global lender has further asked Islamabad to immediately fill two vacant positions of deputy governors at the State Bank of Pakistan (SBP).
The International Monetary Fund (IMF) has recommended an amendment to the SBP Act to remove the finance secretary from the board of directors, The Express Tribune newspaper reported, quoting sources.
This would be the second attempt to exclude the federal secretary in the past three years, according to the paper.
The IMF’s recommendations, part of the Governance and Corruption Diagnosis Mission report, appear aimed at completely ending federal government oversight, despite the government being the 100 per cent shareholder of the SBP, the paper said.
In 2022, under IMF pressure, the government gave absolute autonomy to the SBP and removed the finance secretary’s voting rights on the board.
According to the existing law, the finance secretary is a board member “without the right to vote”.
Key decisions such as exchange rate determination or interest rate setting are not made by the SBP board but by the monetary policy committee.
On Monday, Finance Minister Muhammad Aurangzeb said that the government has no role in setting interest rates, which fall under SBP’s mandate.
He added that the exchange rate would continue to be determined by the market. The rupee further appreciated on Monday to Rs 282 per dollar.
Aurangzeb said the IMF’s review mission would soon arrive under the ongoing 37-month programme.
The mission is expected in the third week of September for talks on the third loan tranche of $1 billion.
The IMF has argued that removing the vote-less secretary from the SBP board would further strengthen independence at an already highly autonomous central bank.
However, sources said the government has not yet accepted the IMF’s recommendation, and discussions remain open.
The SBP board includes the governor and eight non-executive directors, with at least one from each province.
The board oversees SBP operations, administration, and management and has full access to the bank’s activities.
The IMF has also recommended that Pakistan publish the reasons for the removal of governors, deputy governors, non-executive directors, and monetary policy committee members, sources added.
The lender has also pressed for immediately filling the two vacant deputy governor posts to ensure collective decision-making at the central bank.
Of three sanctioned positions, only one is filled, as Saleem Ullah is currently deputy governor for finance, inclusion, and innovation.