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Central Bank Governor Arjuna Mahendran
By Dharisha Bastians
The President’s decision on whether to reappoint the Central Bank Governor Arjuna Mahendran for a further six year term will be based on a ‘performance review’ of sorts, Deputy Minister Eran Wickramaratne said yesterday, as the Government comes under increasing pressure to remove the controversial official.
Speaking to reporters at a press briefing at Sirikotha yesterday, Wickramaratne, who is deputy minister of State Enterprise Development, said that constitutionally President Maithripala Sirisena must make the decision on the appointment, on the Finance Minister’s advice.
“In reaching his decision, the President will have to take several considerations into account. Firstly, whether the present Governor was willing to serve for a further six years,” he said.
Wickramaratne told the news conference that President Sirisena would measure the Governor’s success through the country’s economic progress on one level, since the Central Bank controls monetary policy and the Governor is chairman of the Monetary Board. “The second consideration is institutional performance, since the Governor is responsible for the institution that is the Central Bank,” Wickramaratne explained.
He said ‘performance reviews’ was a practice widely used in the private sector and was applicable with regard to this state appointment.
“The decision is in the President’s hand,” the Deputy Minister said.
Wickramaratne also slammed the SLFP’s decision to go public with its push for the removal of the Central Bank Governor, after Minister Sarath Amunugama told a press briefing on Thursday that the party was officially opposing Mahendran’s reappointment.
“In a coalition Government, we make common decisions. It’s not about getting political mileage. Cabinet ministers in particular share this responsibility, they are part of the executive branch that must make this decision – and it will be a collective ultimately,” he charged.
The issue was not a SLFP problem or a UNP problem, Wickramaratne insisted. “It’s a question about the future of our country.”
Pressed by reporters to divulge his personal position on the reappointment of the current Governor, Wickramaratne refused to take the bait, saying he would not reveal his positions publicly to the media.
“I am a part of the executive branch of the Government. Under those circumstances I shouldn’t be informing the media about my views. I will share my views with the appointing authority, which is the President,” the Deputy Minister asserted.
Wickramaratne said that an investigation into the allegations regarding the Central Bank Governor had been resumed by the Committee on Public Enterprises (COPE), a parliamentary oversight committee chaired by JVP MP Sunil Handunetti. “COPE has full independence and no interference from the Government as it conducts this probe,” he told reporters. “COPE has powers to summon Government officials and take action against them if they refuse to cooperate with their inquiries. Let COPE complete its investigation and present its report,” the Deputy Minister said.
“The Government will act on the COPE report,” he vowed.
The Government has decided to lift the 15% Value Added Tax (VAT) in 121 sectors including health and education services, Deputy Minister Eran Wickramaratne said yesterday.
He added that an official communiqué in this regard would be issued by the Ministry of Finance over the next few days.
Under the revision, Out Patient Channelling and diagnostic tests in private hospitals and critical medical care including dialysis treatment would no longer be subject to the 15% VAT, the Deputy Minister explained. However, admission in private hospitals will be subject to VAT, Wickramaratne said, explaining that this was only fair since not every Sri Lankan can afford medical care at private hospitals.
“It’s understandable that the VAT increase upset people because in some sectors that had never been subject to VAT before, the increase was from 0-15% and not just a 4% increase,” he said. “But it’s globally accepted that VAT is the most progressive form of taxation and the most just system,” Wickramaratne added.
He explained that the Government’s intention was to continue with VAT and gradually reduce the other taxes being imposed on the people at present.
“The Government needs revenue to provide essential services like healthcare and education – both sectors that have been severely neglected over the past decade,” Wickramaratne said.
He said out of eight South Asian nations, Sri Lanka had one of the lowest revenues generated from taxation, numbering seven on the list.
Wickramaratne also explained that the Government was mulling the introduction of a Capital Gains tax to adjust some of the income disparity that had intensified over the past decade. “The idea is also to bring about social justice,” he said.
Nineteen civil society representatives met President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe yesterday to discuss the future of Central Bank Governor Arjuna Mahendran.
The duo listened to various representations made by the civil society leaders apart from sharing their own perspectives. Civil society was assured that the decision would be made on the re-appointment of Mahendran following a final consultation between the President and the Prime Minister.
Deputy Minister of State Enterprise Development Eran Wickramaratne yesterday promised to ensure compliance with Central Bank Directives with regard to the controversy surrounding the state-run Lankaputhra Development Bank chairman.
Wickramaratne, whose Ministry oversees the Lankaputhra Development Bank (LDBL), admitted that there was a controversy about the appointment of the Chairman and a delay addressing the issue.
LDBL Chairman Lasantha Goonewardena was ruled unfit to serve in the position by the Bank Supervision Department of the Central Bank which said his appointment could not be ratified since his conduct was found to be in violation of several sections of the Banking Act. Anti Corruption activists claim the Central Bank Governor Arjuna Mahendran was protecting Goonewardena after letters surfaced claiming the Governor had ‘recalled’ the letter from the Department of Bank Supervision, interfering with the regulator’s independent procedures. Mahendran has denied recalling the directive, despite documentation to the contrary.
“All banks supervised by the Central Bank have to comply with directives from the Bank Supervision Department, and all directors on the boards of banks must be approved as fit and proper by the Central Bank to serve in those positions,” Wickramaratne, a former banker explained.
He said the Central Bank brings any breach to the notice of the State Enterprise Development Ministry.
Wickramaratne addressed the allegation about a second letter from the Central Bank recalling the first letter from the Bank Supervision Department deeming Goonewardena ‘unfit’.
“We have so far been unable to confirm that there has been a second letter,” the Deputy Minister said.
Wickramaratne noted that they had held discussions with Goonewardena and heard the Bank’s case. “When you receive a letter saying you have failed your fit and proper assessment you have the right to make your case,” he explained. “But we will ensure compliance with Central Bank Directives,” the Deputy Minister assured.
