Economy, Business And Markets

MPs to Veto EC Decision on CBI

MPs to Veto EC Decision on CBI
MPs to Veto EC Decision on CBI

The recent decision by the Expediency Council regarding central bank governor’s election and terms of office has drawn criticism strong from a group of lawmakers, Tasnim news agency reported.

“The election of central bank governor at the recommendation of minister of economic affairs and finance and approval of the cabinet has not given independence to the central bank, but to the contrary, it has given full authority to the government”, Mohammadreza Pour-Ebrahimi, parliament observer in Money and Credit Council said.

A reason behind such a decision by the Expediency Council could be to increase the “accountability of the minister of economic affairs and finance” to the parliament on monetary matters, according to Pour-Ebrahimi. However, he believes the decision does not call for the minister’s accountability and worsens the existing situation as the minister can only influence governor’s appointment and has no role in his dismissal. Therefore, he cannot be accountable to the supervisory authorities regarding the CBI governor’s performance.

In addition, by extending the CBI governor’s terms of office to five years, the Expediency Council intended to secure governor’s position in any government. However, the additional note has neutralized the initial objective by allowing the president to change the bank’s governor within 24 hours, he criticized.

He announced that eight members of the economic committee of the parliament have so far expressed readiness to sign a letter addressed to the Leader requesting him not to approve the EC’s decision as it is against the practice in all central banks around the world. Next Sunday, the draft letter will be distributed among the lawmakers for signing, according to Pour-Ebrahimi.

The Expediency Council recently addressed the issue of election and terms of office of the central bank’s governor, after it was referred to the council by the Leader following the disagreement between the former government and the parliament back in 2012. The new approval requires the central bank governor to hold a PhD in economics, monetary or banking disciplines. It also extends the terms of office to five years while authorizing the president of a new government to remove him if more than one year is left from the governor’s term. It has also modified the election process by excluding the general assembly of the central bank as required by 1972 State Monetary and Banking Law.