ISLAMABAD: In compliance with the IMF programme, the government has set guidelines for top appointments in state-owned enterprises (SOEs) and initiated hiring four directors for the Debt Management Office (DMO).

According to a notification issued by the Ministry of Finance (MoF), all ministries and federal SOEs have been directed to meet these minimum conditions described in the SOEs C-Level Appointments Guidelines 2024 to enhance governance, transparency, and operational efficiency and to achieve the strategic objective of eradicating public sector losses and preparing such entities for private sector participation.

Simultaneously, the MoF has also announced vacancies for two directors in management payscale (MP-1) for Risk Management and Data Management and Analytics and two positions of assistant directors in MP-III for borrowing and data management in the DMO.

Under successive bailout programmes, the IMF has repeatedly asked the government to strengthen the DMO to address rising debt challenges. The IMF has also been instrumental in establishing the Fiscal Responsibility and Debt Limitation Act as an institutional arrangement for reviewing, monitoring, and managing debt.

Govt starts filling up four key positions in Debt Office

The MoF said it had issued guidelines for C-level positions — chief executive officer (CEO), chief financial officer (CFO), chief internal auditors (CIAs), and company secretary (CS) — under the SOEs (Governance and Operations) Act 2023. On the instructions of the IMF, the government created a central monitoring unit (CMU) in the MOF for financial monitoring and improvement.

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“These guidelines shall apply to all the public sector companies as defined in the SOEs Act as well as on the statutory SOEs,” said the orders issued by the MOF. However, if required, the boards of directors of statutory SOEs could make necessary adjustments in accordance with their statutory requirements. “All SOEs shall concurrently comply with the applicable laws, rules and regulations as per sectoral regulatory requirements, particularly related to the fitness and propriety, provided those laws and regulations are not inconsistent with the (SOEs) Act.”

The guidelines have come into force immediately with effect from August 15 and “shall apply on any appointments made after this date.”

Under the guidelines, the minimum educational qualifications and experiences for appoints as CEO, CFO, CIA and CS have been clearly defined. However, the conditions for the CEO would remain as generalized as before; he must possess a graduate degree in business administration, public administration, finance, commerce, marketing, or accountancy, with 10 years of relevant experience. The board of directors of SOE would be free to adopt higher educational qualifications and experience thresholds, keeping in view the requirements of the relevant position.

The new guidelines also require that the appointment process be initiated well in advance, preferably three months before the incumbent’s term expires. This requirement was also part of the legal arrangement in statutory organizations and regulatory bodies but was seldom complied with by successive governments and the ministries concerned.

The vacancies would be advertised through publication in the print media and the SOE website with clear specifications about minimum qualifications, experience, age, and other fit and proper criteria and roles and responsibilities. This was also legally required earlier, but the authorities have been violating it at will and stretching its limits to suit their favourite candidates.

In the case of CFO and CIA, the minimum requirement for the candidate would be to be a member of an organized body of professional vaccountants with five years’ experience and Rs5bn assets of SOE. The selections for all these positions would be considered by the board committees based on response to the advertisement, identified through SOE’s succession plan, or shortlisted by a headhunting firm.

Published in Dawn, August 16th, 2024