Granting independence to central bank in interest of the country: Asad Umar

Minister for Planning and Development Asad Umar has said that granting more independent to the State Bank's will have a positive impact on country's economy.

In an interview with a private television channel, he said State Bank is a national institution which must have independent role for boosting economy and business activity.

“The ordinance will be placed in the assembly, where it will be referred to the finance committee. I would like to recommend that when this ordinance is brought forward, all leading economists of Pakistan especially those specializing in Monetary Policy alongside the Opposition members come forward and give their suggestions,” he said.

Asad Umar said that the upcoming ordinances is part of IMF recommendations. He said that those countries, which have granted more independence to their central banks have seen a positive impact on their economies.

“The direction is right that an independent central bank is in the interest of a country,” he said. The minister said that the issues pertaining to the ordinance should be discussed.

Replying to a question about government's policy on vaccine, he said the government is committed to administer vaccine to all citizens.

Finance Ministry has uploaded the proposed State Bank of Pakistan (SBP) Amendment Act, 2021, and stated that in light of international best practices and domestic experiences, legal framework of the central bank is being amended to increase functional and administrative autonomy of the central bank.

According to the salient changes of the proposed bill, the legal framework of the SBP is being amended to: (i) clearly define the objectives of the SBP to improve its accountability; (ii) outline the SBP’s functions in line with its objectives; (iii) provide necessary financial resources to help achieve objectives; (iv) increase functional and administrative autonomy of SBP; (v) improve transparency in operations of the SBP; (vi) strengthen accountability by making oversight functions stronger and enhancing reporting requirements.

The law states that by defining objectives more specifically, the SBP accountability is being enhanced and second, in order to achieve these objectives, the SBP functions are being suitably aligned and the SBP is being provided with sufficient financial resources; (i) share capital; (ii) sufficiency of capital and reserves; (iii) recapitalisation; and (iv) distribution of profits.