Govt. must uphold CB independence: Eran

Wednesday, 3 June 2020 00:58 - - {{hitsCtrl.values.hits}}

Concerned over recent resignation of two Monetary Board members
Claims pressure was exerted to make room for Govt. appointees
Says Monetary Board members appointed for fixed terms to protect CB independence

Former State Minister of Finance and Samagi Jana Balawegaya (SJB) member Eran Wickramaratne yesterday warned the independence of the Central Bank (CB) was being eroded after two Monetary Board members resigned recently to make way for Government appointments.

Eran Wickramaratne

The two resignations were Institute of Policy Studies Executive Director Dr. Dushni Weerakoon and banker Nihal Fonseka, who last week stepped down from their positions before the fixed terms they were appointed for expired.

Speaking at a press conference yesterday, Wickramaratne stated that the recent resignation of two competent members of the Central Bank’s Monetary Board took place following pressure from the Government.

“I understand there was some pressure for them to go. The role of the Central Bank is an independent role to the Government, all over the world this is accepted and we need to protect the role of the Central Bank. Amongst its many responsibilities are price control, inflation and money supply. As opposed to fiscal policy and therefore the Central Bank has to be independent,” he explained.

He argued that Government pressure was pushing out highly competent professionals, who were appointed for fixed terms to ensure policy consistency, which is important for the banking sector. Those appointed to the Monetary Board should be individuals with relevant skills, he added.

“The appointments to the Monetary Board are made by the President, who first proposes names, which are then cleared for being fit and proper by the Constitutional Council, and only then are the appointments made, and these appointments are for a fixed term. But unfortunately when you force out members of the Monetary Board, the independence of the Central Bank is threatened,” Wickramaratne said.

“We know that in the judiciary appointments are for a fixed term. When a judge is appointed to the judiciary that judge serves till retirement. That is to ensure independence,” Wickremaratne added, explaining that when those appointed for fixed terms are forced out it brings into question the entire organisation or institution.

The former State Minister also expressed his disappointment that the leadership of the Central Bank has remained silent while pressure was being exerted by Monetary Board members.

“I’m calling upon the Government to respect the independence of the Central Bank and the valuable intellectual capacity of the establishment,” he said, pointing out that the Government’s policy can differ from the monetary authority but its independence must be upheld.