Is new Central Bank Act a tick-the-box exercise?

Thursday, 9 March 2023 00:01 - - {{hitsCtrl.values.hits}}

As per the new Central Bank Act, it is welcome to have an independent non-politicised Central Bank and Monetary Board and having the Governor grilled by the Parliamentary Select Committee as to accountability and oversight like in the US with regard to financial stability. However monetary and exchange rate policies through instrument autonomy alone is challenging given the extent of imported inflation and FDI and export dependence, excessive Foreign Currency borrowings which require a realistic exchange rate to make our goods and services competitive.

Furthermore the components of inflation to manage inflation targeting like tariffs, petroleum prices, etc. are another matter. How about the need of a lifeline for the poor and vulnerable in a country where there is no social security and food security.

I believe the Governor, when put through the griller can find numerous reasons why he could not meet the inflation targets set by the Government and such appearances by the Governor can end up being a total farce.

Anyway the new Central Bank Act is interesting conceptually but I believe more than anything else we urgently need honest and un-politicised bureaucrats like the Permanent Secretaries we had in the good old days who stand up even to Prime Ministers and Ministers. If we can have that, all our problems will be halved and the other half can be looked after by the International Monetary Fund and other multilateral agencies.

I think independence of the Central Bank/Monetary Board will only be “tick a box” to meet the IMF conditionalities for funding but will be a farce like all other independent commissions we have set up in this country.

The latest being the Board of Inquiry report on the Aragalaya done by the three ex Service Commanders who have found Shaveendra Silva responsible for having Gotabaya Rajapaksa and the rest of the Rajapaksas kicked out. Further, they state that the President must be safeguarded and protected even more than the people. Wonder who pays.

Citizen Silva