Government says central bank autonomy not without checks and balances

ISLAMABAD: A senior Pakistani minister on Tuesday criticized the opposition for making a legislation regarding the central bank’s autonomy controversial, saying the new law was not without checks and balances which were incorporated after “hard negotiations” with the International Monetary Fund.
The law was approved by the country’s national assembly last week and was enacted on the international financial institution’s insistence which had been demanding it to protect the State Bank of Pakistan (SBP) from any political interference.
The IMF executive board is scheduled to review Pakistan’s progress in terms of the implementation of structural reforms under a $6 billion loan program and may release another tranche of $1 billion later this month.
Pakistan’s energy minister Hammad Azhar told a news conference in Islamabad that central banks were always kept autonomous in the world since there was enough evidence that it allowed developed nations to bring down inflation and ensure economic growth.
“The federal government will appoint the central bank’s board of directors whose members can even remove the state bank governor,” he said, adding: “We managed to secure this concession of appointing the state bank board along with its governor and deputy governor from the IMF after hard negotiations.”
Azhar maintained previous administrations tried to influence central bank officials while dictating them how to manage the county’s monetary policy.
He added a similar bill was also suggested in 2015 by the opposition Pakistan Muslim League-Nawaz party wherein it was willing to surrender all its powers to the central bank board.
The minister noted the government had brought about a comprehensive reform in the area which was also “demanded by serious Pakistani economists for a substantially long period.”
Refuting the opposition’s criticism over the law, he said it was only going to strengthen the country’s economy and ensure sustained growth momentum.