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State Bank of Pakistan

Parliament to approve amendments to SBP Act by September

KARACHI: The National Assembly likely to adopt amendments to State Bank of Pakistan (SBP) Act by September 2021.

This was assured by the Pakistani authorities to International Monetary Fund (IMF).

The ministry of finance submitted the amendments to parliament in March 2021 and the authorities expect adoption by parliament by end-September 2021.

The authorities assured the IMF about making good progress toward strengthening the SBP’s autonomy, governance, and mandate.

The authorities said: “We have worked closely with IMF staff in the preparation of amendments to the SBP Act to address existing gaps.”

The amendments aim to:

(i) establish domestic price stability as the primary objective, with financial stability and growth as secondary objectives;

(ii) clearly define the SBP’s functions to help achieve these objectives;

(iii) strengthen the SBP’s financial autonomy, including through statutory mechanisms for sufficient recapitalization and profit retention; (iv) prohibit the extension of direct credits or guarantees to the general government;

(v) establish the statutory underpinnings for audits;

(vi) secure stronger protection of the personal autonomy of senior officials;

(vii) further strengthen collegial decision making at the executive management level;

(viii) provide stronger oversight by the Board; and

(ix) improve SBP’s accountability regarding the conduct of its monetary policy and the achievement of its objectives.