Governor Dr. Nandalal Weerasinghe on Friday emphasised that the role of the Central Bank is to make right decisions and not those populist.

His remarks were in response to questions by the media regarding some criticism levelled by economist Dr. Howard Nicholas during a recent television debate over the new CBSL Act which is to be tabled in Parliament this month.

Noting that people are entitled to their opinion, Dr. Weerasinghe said that an independent Central Bank is critical to ensure sustainable development of Sri Lanka and all successful countries have ensured an independent Central Bank. 

“Central Bank’s monetary policy decisions can’t be populist. Such policy is for the benefit of the people and country and not to a particular Government. Central banks must be independent, accountable to the Parliament and the public,” he said.

He recalled that various practices such as Modern Monetary Theory (MMT) as well as departure from the core objective of inflation targeting had led to hyperinflation and even led to crises such as ours. 

The International Monetary Fund (IMF) which is finalising a $ 2.9 billion four-year Extended Fund Facility (EFF) program for Sri Lanka has recommended a stronger Central Bank autonomy that allow pursuing a flexible inflation targeting regime. “A new Central Bank Act is a cornerstone of this strategy,” the IMF emphasised. 

New CBSL Act a win-win for all stakeholders:  Dr. Coomaraswamy