The World Bank and IMF have asked Pakistan to consolidate the privatisation and legal reforms to avoid any future policy reversals.
This was stated by Finance Minister Shaukat Aziz here on Friday in a press briefing.
He said that both institutions have been informed that the government is introducing 'benami' law appointing a banking ombudsmen and bringing in anti-money laundering (AML) law.
"The World Bank and IMF have commended Pakistan for introducing sweeping reforms in the banking and financial sectors which have led to the soundness and expansion of the private sector in these areas.
However, they have urged that in order to ensure that the structural reforms, introduced in recent past, continue to reap the benefits of these reforms, and the system is protected. The government should pursue the privatisation process and introduce legal reforms," Aziz said.
All these measures, in fact, are directed to protect the system and that reforms continue, he said.
The minister said that the initial draft of the AML law was approved by the federal cabinet and forwarded to law ministry for vetting, which would be sent back to finance ministry soon after vetting to be finally approved by the Cabinet.
The minister informed that the Bretton Woods Institutions were also informed that after successful launch of $500 million Eurobond, the government was contemplating upon launching of 'Suqooq', the Islamic Bond sometimes next fiscal.
The financial institutions and investors in the US were all praise for the success of Euro Bond, the spread of which had narrowed to treasury plus 276 basis points from 320 basis points.
The World Bank-IMF joint assessment report prepared this month has fully supported Pakistan's initiatives and noted that the country has achieved a high degree of transparency in the monetary and fiscal policy. The report was discussed during the spring meetings in Washington, he said.
The two institutions have asked the government to ensure that no policy reversals take place and at the same time called for the need to introduce reforms in the insurance sector as well.
"The two institutions touched upon the pensions reforms, to which they were informed the forthcoming federal budget for 2004-05 would bring major reforms in pensions," he said.
The two institutions noted that Pakistan has put a weak and sinking banking sector into an efficient and growing private sector and increased competition has increased the spread to SMEs, Agriculture and other innovative sectors.
He said the report also noted that financial soundness and great resilience has also led to a situation where Pakistan's banking sector was fully in compliance with international standards.
The two lenders have called for further consolidating the reforms process and appreciated the rationalisation of national saving schemes.