Business

Central Bank Governor should have stood up to Government: Eran

By Madhusha Thavapalakumar

Central Bank of Sri Lanka (CBSL) Governor Prof. W.D. Lakshman should have stood up to the political pressure that resulted in two of the Monetary Board members tendering their resignation recently, former MP Eran Wickramaratne said last week.

Wickramaratne, the former State Minister of Finance, told The Sunday Morning Business that he was astounded that an academic like Prof. Lakshman did not stand up against the Government to protect the independence of the Monetary Board.

“I am shocked that an academic has not stood up. I am very disappointed in the Governor. When they are outside the Central Bank they talk about freedom, but they do not practise those principles,” Wickramaratne stated.

These statements from the former State Minister came following the resignation of former Colombo Stock Exchange (CSE) Chairman and veteran banker Nihal Fonseka and Institute of Policy Studies (IPS) Executive Director Dr. Dushni Weerakoon from the Monetary Board, as first reported by The Sunday Morning Business last Sunday (31).

Fonseka told The Sunday Morning Business on 31 May that he had submitted his resignation due to a request by the Government.

“Yes, a few weeks ago I was informed that the Government would like to reconstitute the Board so I thought I would step down voluntarily to provide them that opportunity,” he said.

Wickramaratne said that while he was disappointed with the fact that Fonseka and Dr. Weerakoon submitted their resignation when they could have stayed on, he understands the pressure that was faced by them.

“I understand the pressure that has come from the private sector and civil society and they would have naturally wanted to maintain their professional integrity. This violates fundamental principles,” Wickramaratne added.

Nihal Fonseka was appointed in July 2016 and resigned before the completion of four years, while Dr. Dushni Weerakoon was appointed as recently as July 2019 and resigned within her first year.

The former State Minister further noted that under their governance, which ended in November last year, the then CBSL Governor Dr. Indrajit Coomaraswamy had always expressed his disagreements and stood up to protect the independence of the CBSL.

“Having been the former State Minister of Finance, we tried very hard not to interfere with the independence of the Central Bank and I do not think anybody could point a finger. But we had disagreements and we voiced our disagreements,” Wickramaratne added.

Furthermore, he noted that it is troubling as it looks like the current regime is moving in a direction of trying to have only like-minded people to work under their governance.

“This simplistic idea of when somebody says go left, you go left; it looks like Sri Lanka never learnt,” he added.

When we contacted Governor Lakshman to get his comments on Wickramaratne’s statement, he refused to comment on the matter.

Nihal Fonseka was appointed in July 2016 and resigned before the completion of four years, while Dr. Dushni Weerakoon was appointed as recently as July 2019 and resigned within her first year.

The third Non-executive Monetary Board member is Sanjeewa Jayawardena PC, who was appointed in February this year. He is expected to remain on the Board.

In terms of the Monetary Law Act, the corporate status is conferred on the Monetary Board, which is vested with all powers, functions, and duties. As the governing body, the Monetary Board is responsible for making all policy decisions related to the management, operation, and administration of the CBSL.

The Monetary Board of the CBSL consists of five members; the Governor, the Secretary to the Ministry of Finance, and three non-executive board members. The Governor is the Chairman of the Monetary Board and also functions as the Chief Executive Officer of the CBSL.

The Governor and the non-executive board members are appointed by the President, on the recommendation of the Minister of Finance. The approval of the Constitutional Council is also required for the appointment of the non-executive board members. The term of office of the Governor and the non-executive board members is six years.