Financial Risk Manager

Ways of Financial and Risk Management

SBP's actions required by IMF
Tuesday, February 3, 2009

There are some SBP's actions required by IMF in memorandum of economic and financial policies. Summary of those measures , required actions and timelines are as follows;

Changes in policy rate:

Consideration of a further increase in the discount rate at the time of the monetary policy statement for H2-FY09 (End Juanuary, 2009).

An earlier increase in discount rate if the actual reserve for end November and end December, 2008 fall short of the program monthly floors on the SBP’s net foreign assets (During Nov-Jan, 2009)

Operational independence of SBP:

Formation of an interagency committee for review and recommend charges in the legal provisions relating to the operational independence of the SBP (By Mid – Nov, 2008)

Amendments in BCO:

Submission of necessary amendments in the Banking companies ordinance to the parliament for the strengthening SBP’s ability to (i) change management in banks: (ii) impose losses on shareholders by writing down their capital (iii) intervene and take ownership of banks: (iv) appoint administrators to operate banks: and (v) restructure banks.(By End – Jun, 2009)

Oil Support to market:

Phasing out the SBP’s provision of the foreign exchange for oil imports according to the following schedule: Furnace oil (By Feb 1,2009) Diesel and other refined products (By Aug 1,2009) Crude oil (By Feb 1,2010)

Liquidity management:

Review of the current procedures for liquidity management, and adoption and publicization of a transparent liquidity management framework, including the announcement of an explicit corridor for money market interest rates (By End –Jul, 2009)

Auction calendar:

Issuance of a T-bills auction calendar for ever quarter (One month in advance)

Advance import payments:

Elimination of the exchange restriction on advance import payments against letters of credit (subject to a marked improvement in the balance of payments position) (By End –Jan, 2010)

Plan for problem banks:

Preparation of a contingency plan deal with problem private banks, containing criteria for SBP liquidity support assessment of bank problems and intervention procedures (By End –Dec, 2008)

Ref: Monetary Policy Statement, January-March, 2009 (SBP)

Labels: Economy and Business, Pakistan Economy