PM forms panel to review changes to SBP Act

Prime Minister Shehbaz Sharif has instructed the Cabinet Division to consult Minister of State for Finance Ali Pervaiz Malik on cabinet-related economic matters and constituted a body to review a proposal to allow dual nationals to become governor and deputy governor of the central bank.

The federal cabinet on Monday deferred the approval of the State Bank of Pakistan (SBP) Amendment Bill after Malik raised the objection that he had not been consulted by the finance ministry on the matter.

The finance ministry had moved the summary for the approval of the cabinet to amend the SBP Act. According to the Rules of Business of 1973, the federal minister approves and authorises the submission of summaries to the cabinet.

However, Malik's viewpoint in the meeting was that he should have been consulted before taking up such matters at the cabinet level or else it would not be possible for him to back summaries, sources said.

According to the sources, this was not an isolated incident where the minister of state had been ignored in important matters. They said that the Attorney General for Pakistan (AGP) also told the cabinet that his office had endorsed a cabinet summary of which he was not aware.

The prime minister then instructed the Cabinet Division to ensure that the minister of state was consulted on all matters. Malik is the choice of the prime minister for the position of minister of state for finance and revenue. He is known to be unorthodox and often takes positions on important policy matters.

The federal cabinet did not approve the ministry of finance's summary and instead decided to constitute a committee to review the bill. The finance ministry had proposed around a dozen amendments to the SBP Act which the law ministry had also vetted.

The finance ministry has proposed allowing dual nationals to serve as governor and deputy governor of the central bank and legalising the use of digital currency in Pakistan.

This restriction had initially been imposed in January 2022 following broad amendments to the SBP Act influenced by the International Monetary Fund (IMF) and the preferences of the former governor. Notably, however, the IMF had not specifically advised the restriction on dual nationals.

The government had proposed an amendment to Section 13 of the SBP Act, which addresses the disqualification of the governor, deputy governors, directors and members. The current clause disqualifies any person holding dual nationality from serving in these roles.

The new amendment proposes removal of the term 'having dual nationality' from this section, effectively lifting the restriction.

The sources said that some cabinet ministers had objected to allowing dual nationals to become governor and deputy governor. They pointed out that, in most cases, such dual nationals returned to the countries from where they had come to serve.

Finance Minister Muhammad Aurangzeb , who had renounced his Dutch nationality after taking the oath as the finance minister, stated in the meeting that subject specialists were needed and thus the government should allow dual nationals to become governor and deputy governor.

Some cabinet members said the government should at least declare a few positions exempt from the ban on dual nationals. The prime minister directed the Cabinet Division to constitute a committee and thoroughly review the proposed bill before bringing it to the cabinet.

One of the SBP's deputy governors, Dr Inayat Husain, who is a dual national, completed his term on November 8. Given his experience and significant role within the SBP, the government is interested in retaining him for a new five-year term. When Dr Husain had originally been appointed, there had been no restriction in place on the appointment of dual nationals.

There are two vacant deputy governor positions and Dr Inayat Husain and former IMF Senior Adviser Dr Saeed Ahmad – both holding dual nationalities and foreign-origin cards – are the leading candidates for them.

Under the current law, the federal government appoints deputy governors based on the recommendation of the SBP governor and in consultation with the finance minister from a list of candidates submitted in order of merit.