ISLAMABAD
The International Monetary Fund (IMF) has recommended key reforms to enhance the autonomy of Pakistan’s central bank, the State Bank of Pakistan (SBP). The IMF has asked Islamabad to remove the finance secretary from the SBP board, a non-voting member under current law, arguing that this step would further strengthen the bank’s independence. It has also suggested amending the Banking Companies Ordinance of 1962 to eliminate federal government authority to direct inspections of commercial banks.
Additionally, the IMF has pressed Pakistan to immediately fill two vacant deputy governor positions at the SBP to ensure effective collective decision-making. Currently, only one deputy governor, Saleem Ullah, holds a regular position, while another, Inayat Husain, has been serving in an acting role since November last year. Legal hurdles, including dual nationality issues, have delayed permanent appointments. The government has formed a committee to explore amending the law to permit dual nationals to serve as deputy governors.
The IMF’s recommendations are part of its Governance and Corruption Diagnosis Mission and aim to reinforce an already autonomous central bank, despite the federal government being its sole shareholder. It also called for publishing reasons for the removal of governors, deputy governors, and non-executive directors.
Finance Minister Muhammad Aurangzeb confirmed that interest rate decisions remain under SBP’s mandate, and the exchange rate continues to be market-determined. The IMF’s review mission is expected in September to discuss the third tranche of Pakistan’s $7 billion loan program. The lender emphasized that all vacant key posts must be filled promptly to meet regulatory requirements and facilitate smoother monetary governance, which is critical for ongoing IMF support.
This initiative represents the IMF’s continued push to consolidate SBP’s independence while ensuring robust oversight and adherence to agreed reform conditions.
