PM bars dual nationals from SBP

Prime Minister Shehbaz Sharif has blocked a move to allow dual nationals to become governor, deputy governors, and members of the monetary policy committee of the central bank after a cabinet committee unanimously recommended making dual nationals eligible for these positions.

The federal cabinet last week deferred the approval of the State Bank of Pakistan Amendment Bill 2024 for the second time this time at the behest of the prime minister himself, said government sources.

PM Sharif had constituted a body to review a proposal to allow dual nationals to assume key positions in the central bank. The sources said the premier expressed in the meeting that no specific relaxation against the legal ban should be allowed for appointing the governor, deputy governors, and members of the monetary policy committee of the State Bank of Pakistan (SBP).

Under existing laws, dual nationals cannot become members of Parliament, and a similar restriction was introduced for the central bank’s management and policy positions in 2022.

The finance ministry had moved a summary for cabinet approval to amend the SBP Act, aiming to allow dual nationals to become deputy governors and legalise the use of cryptocurrencies.

Earlier, when the finance ministry presented the Bill for approval, the prime minister had constituted a committee chaired by Planning Minister Ahsan Iqbal. Other members included the ministers of Defence, Law, Finance, FBR chairman, and secretary finance.

The cabinet committee had unanimously recommended deleting Section 13A of the SBP Act, and its report was presented before the cabinet last week, said sources.

Section 13A states that no one can become the governor, deputy governor, director, or member of the SBP if he or she “is a member of Parliament or a Provincial Assembly, or a Local Government or has dual nationality.”

However, sources said the PM did not agree with the proposed deletion and, at the request of the finance ministry, deferred the matter again.

This restriction on dual nationals was initially 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 removing the term “having dual nationality” from this section, effectively lifting the restriction.

Sources said some cabinet ministers objected to allowing dual nationals to hold key positions in the SBP, arguing that such individuals often return to their countries of origin after their tenure.

Finance Minister Muhammad Aurangzeb, who renounced his Dutch nationality upon taking the oath as finance minister, stated in the meeting that subject specialists were needed and, therefore, dual nationals should be allowed to assume key roles in the central bank.

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

If the prime minister does not change his position in the next cabinet meeting, the central bank will have to let go of Dr Husain.

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.

Last month, the Senate Standing Committee on Cabinet considered a bill seeking to bar civil servants from holding dual nationality. Senator Dr Afnanullah Khan had proposed an amendment to the Civil Servants Act, arguing that civil servants take an oath of loyalty to Pakistan and, therefore, cannot be loyal to two countries simultaneously.

The cabinet division has asked the Iqbal-led committee to review the amendments relating to dual nationals proposed in the draft State Bank of Pakistan Amendment Bill 2024 and examine the implications of allowing dual nationals to hold sensitive positions in the central bank.

Its other terms of reference include providing recommendations on whether the amendments should be accepted as proposed, rejected, or modified to empower the federal cabinet to grant exemptions to meritorious candidates holding dual nationality under special circumstances.

The committee was also tasked with determining whether existing restrictions on the appointment of dual nationals in the SBP or any modifications to these restrictions should be specific only to the central bank or whether they should also be introduced for other government organisations.

The Cabinet Committee decided that the existing clause and the words “having dual nationality” in Section 13A of the SBP Act may be deleted, subject to disclosure regarding dual nationality.