Central Bank Under Fire as Audit Exposes Governance Failures
Pakistan’s central bank is facing criticism after the Auditor General of Pakistan reported financial mismanagement and irregularities exceeding Rs243 billion. The 2022–23 audit painted a troubling picture of the State Bank of Pakistan’s regulatory role.
The report revealed Rs59 billion in loan defaults from state-owned banks with little regulatory action. It also criticised the central bank for failing to provide relief to small borrowers, who were charged a high 13% interest rate, leading to Rs12 billion in losses.
The most significant blow was the Rs105 billion loss from selling securities below cost, while poor investment choices with foreign managers resulted in another Rs26 billion loss.
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Public trust was further eroded when SBP printed 72 million commemorative notes worth Rs9.15 billion. The decision backfired, causing a Rs1.96 billion loss as the public showed little interest in the new notes.
The audit also flagged governance issues, including the controversial appointment of an Australian national as Deputy Governor, earning Rs120 million annually against regulations.
Other irregularities included Rs5 billion in loans to a private bank, Rs2.59 billion in unauthorized financing facilities, and Rs3.81 billion in housing loans to employees without settling past dues. Embezzlement of Rs63.5 million in medical stock and unverified degrees of eight senior officers further highlighted internal weaknesses.
