Central Bank implements controversial salary recommendations by Parliament

The Central Bank yesterday confirmed that it is moving forward with the implementation of salary revisions as directed by the committee and Parliament.

“We are in the process of implementing all the recommendations in the report, following it being endorsed by an independent committee and the Committee on Public Finance (CoPF),” Central Bank Governor Dr. Nandalal Weerasinghe said at the post-Monetary Policy Review meeting media briefing.

The decision to implement steep salary hikes for CBSL staff sparked concerns amid debates over the autonomy of the Central Bank and the implications of recent legislative changes.

In February, the Governing Board of the CBSL requested Governor Dr. Weerasinghe, in accordance with Section 80(2)(b) of the Central Bank of Sri Lanka Act No. 16 of 2023, to formally request the Finance Minister to seek an opportunity to brief Parliament through an appropriate committee on the rationale and process behind the recent revision of remuneration for CBSL staff. This request followed a meeting on 21 February, where the issue was discussed in detail.

The salary revisions, approved by the Governing Board under a triennial collective agreement with trade unions covering 2024-2026, have been highly controversial. 

On 6 March, CBSL officials were summoned before Parliament to justify the significant salary hikes, which have drawn sharp criticism from MPs. During the party leaders’ meeting on the issue, MPs condemned the move as a violation of the law, arguing that the CBSL lacked the legal authority to unilaterally increase salaries without prior Parliamentary approval. 

They also pointed out the additional monthly expenditure of Rs. 232 million resulting from the hikes.

Critics, including MPs, have highlighted the moral contradiction of the Central Bank increasing its employees’ salaries while simultaneously introducing policies that raise taxes such as PAYE and VAT for other segments of the workforce. 

On 1 April, the President, in his capacity as the Finance Minister, appointed an Independent Remuneration Committee to review the salary increases. The committee, chaired by Dinesh Weerakkody, included Arjuna Herath, Dr. Indrajit Coomaraswamy, Sudharma Karunarathne, Anthony Nihal Fonseka, Anushka S. Wijesinha, and Duminda Hulangamuwa. 

On 19 June, CoPF Chairman Dr. Harsha de Silva informed Parliament that the report from the Independent Remuneration Committee, appointed by President Ranil Wickremesinghe to review the salary increases, was received and the report indicated that the salary increases should not have been implemented.