CB chief must stick to monetary policy

Thursday, 17 November 2011 00:45 - - {{hitsCtrl.values.hits}}

UNP MP Dr. Harsha de Silva fired a fresh salvo at Central Bank Governor Nivard Cabraal for moving away from his statutory role of being monetary policy-centric and making strong statements concerning fiscal policy which is the job of Finance Ministry. Dr. de Silva was responding to some of the recent statements by Cabraal about the Government’s committed drive to boost public investments as well as continuing with the planned Hambantota Sports City project despite the loss of the 2018 Commonwealth Games bid.

“We have a Minister of Finance who is also the President to focus and deal with fiscal policy under which comes the planned mega public investments to develop Hambantota. The Central Bank Governor should either stick to monetary policy and price stability or if he is keen to talk about fiscal policy and related matters then he can jolly well ask the President to give him (Cabraal) a Ministerial post by securing a seat in Parliament,” Dr. de Silva said.

In the Daily FT front page article titled “Govt. plans $ 21 b public investment through 2015” yesterday Cabraal was quoted as saying in a Reuters report as “Our public investment program is more than $ 21 billion over the next year years.”

He said that public investment will be 6.5% of GDP annually and this will be spent towards all infrastructure. The Reuter report also said that public investment in 2011 is estimated to be $ 3.75 billion, $ 4.43 billion next year $ 5.05 billion in 2013. This number will rise to $ 5.76 billion in 2014 and to $ 6.53 billion in 2014.

As per Reuters report opposition parties say Rajapaksa’s Government is spending beyond the country’s means and has pushed through the projects with minimal transparency, and awarded them to politically-connected firms in and China.

Sri Lanka’s total outstanding debt has risen 57.5% to Rs. 2.3 trillion through August since the war’s end in May 2009.