SBP bill proposes five-year term for governor, other members of MPC

ISLAMABAD: The government has proposed extending tenure of governor, deputy governors, non- executive directors, and external members of the Monetary Policy Committee (MPC) from three to five-year term under State Bank of Pakistan (SBP) Amendment Bill 2021 to bring it in line with the tenure of the politically-elected government.

According to the draft of the SBP amendment bill 2021, the Governor, Deputy Governors, the executive directors and the external members of the Monetary Policy Committee shall be appointed for a term of five years and shall be eligible for one re-appointment for another term of five years.

No person shall hold the office of the Governor or Deputy Governor after attaining the age of 65 years. The proposed bill states that all the aforementioned members of the Monetary Policy Committee shall not be eligible to become a Director or Member after vacating the office until the expiry of the term of office for which they were appointed: provided that entry into force of this amendment act shall not affect the security of tenure of the incumbent governors, deputy governors and the non executive directors who shall remain in office until their current term expires in accordance with their current terms and conditions. The external members shall be appointed by the federal government upon the recommendations of the Board of Directors.

In the event of the vacancy arising among on any slot of the MPC, an appointment referred to in sub- section (1) (2) and (3) shall be finalized within a period not exceeding 30 days on the occurrence of such vacancy.

The Governor and Deputy Governors shall devote their whole time to the affairs of the Bank and shall not engage in any business or other profession during the office tenure.

The proposed bill seeks substitution of Section 13 Act XXXIII of 1956 for disqualification of Governor, Deputy Governors, Directors and Members stating that no person shall be or shall continue to be Governor, a non executive director, an external member of MPC and a deputy governor who is a member of the Parliament or a provincial assembly, (b) is employed in any capacity in the public service of Pakistan or any province of Pakistan. The terms and conditions of service including remuneration of Governor and Deputy Governor shall be determined by the Board of Directors. Their leave and official foreign travels shall be determined by the Board and Governor respectively.

When former Chief Economist Dr Pervez Tahir was asked about this proposed SBP amendment bill 2021, he said that the second terms for the SBP Governor could be termed as conflict of interest in the context of autonomy because the Governor would toe the line of action of the appointing authority to secure his second term. There should be one term only, he proposed. He also recommended strengthening Parliamentary oversight as submitting the annual report to the Parliament alone does not ensure effective accountability mechanism. He however suggested complete administrative autonomy to the central bank.

Top official sources said the people of Pakistan have the right to know of the pay package of the incumbent Governor. So the parliamentarians who are going to scrutinize the SBP Amendment Bill must seek information on the comparison in pay and package of the incumbent Governor SBP Dr Raza Baqir and the former Governor Tariq Bajwa. The lavish package provided to Governor includes perks and privileges including memberships of two clubs of choice, free accommodation, paid vacation, besides others. The DGs in SBP are currently drawing on average salary of around Rs 3.5 million per month. The members of the existing Board of Directors of the SBP were not fully satisfied and they had sought more details about the proposed amendments.

When this scribe contacted a senior official of the Finance Division on the issue, he said the pay and package of Governor SBP was finalized during the tenure of previous secretary Finance Naveed Kamran Baloch so the top officials do not have the knowledge about it. However, sources in SBP said that the Board members were briefed about the proposed bill and more details would be shared shortly. But they refused to inform anything about the pay and package of the incumbent Governor SBP.