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Newly appointed Central Bank Governor Ajith Nivard Cabraal signs a document after assuming duties in a simple ceremony – Pic by Upul Abayasekara
By Charumini de Silva
New Governor of the Central Bank Nivard Cabraal yesterday assured that he would stabilise the economy amidst unprecedented times by guiding markets with prudent policies and being mindful of repercussions.
Reducing foreign debt, increasing non-debt inflows and thereby increasing the foreign reserves, better managing the external account, stabilising the rupee, navigating the GDP growth upwards and enhancing the infrastructure, were listed as the priorities of the Central Bank over the next three to six months.
It is now a third term as Central Bank Governor for Cabraal, having previously served from 1 July 2006 until his resignation on 9 January 2015. He succeeded Prof. W.D. Lakshman, who resigned on Tuesday after less than two years on the job.
Lakshman cited unspecified “unpleasant events” in recent weeks that had hastened his resignation, as opposed to stepping down next month on turning 80 years of age.
In his speech after assuming duties, Cabraal likened the role of the Governor at this turbulent time to wearing a “crown of thorns”. However, he emphasised that the Central Bank was an institution created to provide economic leadership and asserted that he would ensure this role is fulfilled efficiently and effectively.
“It is not easy to manage the incomparable factors and find the right balance – but this is the challenge of the Central Bank right now. We have to ensure that we have the necessary hands in all these matters so we can deliver the right results as far as the country is concerned,” said Cabraal, who on Monday resigned as MP and the State Minister of Money, Capital Markets and Public Enterprises Reform to take up the Governor post. He was appointed to Parliament from the National List of the ruling Sri Lanka Podujana Peramuna.
Cabraal also emphasised that bold policy measures must be taken, as there were no shortcuts. “At times you have to take tough policy measures and it always has repercussions from another side. It means we have to be conscious of all the outcomes that generally arise when you take certain bold policy measures. The Central Bank has the responsibility to take certain policy decisions and we will take the bold measures needed to lead the economy,” he added.
“We have to find solutions; we have to proceed ourselves as to find which tool will give the best results given the time and then implement it in a systematic manner so that we can take the economy and country forward. We need to implement the necessary measures not tomorrow, not day after tomorrow, but today, if it needs to be done. This is very important for us to realise in a time of a turbulence, where we have significant challenges.”
The 16th Governor of the Central Bank, Cabraal also said he also hopes to bring discipline to the market, to enable the people to be aware of what needs to be done and the rationale of the Central Bank for taking such measures. He said the Central Bank would also give leadership by providing the guidance to markets with clear and sometimes bold measures.
The Governor hopes to talk to all the stakeholders in the coming days to outline the country’s economic direction so that they may be able to make their future decisions.
“When we take the decision, we must take all the aspects of the economy into consideration – the real economy, monetary sector, fiscal sector, banking sector and external sector, which are all interconnected. We must also communicate those messages to the country that each of these aspects of the economy are being considered by the Central Bank when we go forward,” he pointed out. Cabraal also expressed hope to move across to more stable times notwithstanding all the tough issues the country is currently faced with.
Country’s plan is President Rajapaksa’s vision
Cabraal, said the plan for the country was the same as the vision of President Gotabaya Rajapaksa – to bring prosperity to the nation.
“The country expects us to work in tandem with the ideas of the people who have also given the mandate to the Government. The Central Bank also provides the support to realise that vision, as that is what the country expects from us. We will ensure that the monetary policies are implemented in such a way that we will have the comfort with that of the fiscal policies,” he stressed.
Noting that he would talk to the fiscal authorities too in the coming days, Cabraal said the Treasury Secretary, who serves on the Monetary Board, was an added advantage to the Central Bank.
The Governor said he expects to seek the views of the Central Bank staff to realise the dreams and the visions that the people of Sri Lanka supported and wanted to be implemented.
Noting that people often wanted to seek advice from the outside, such as the International Monetary Fund (IMF), Cabraal said that the Central Bank has the necessary ability, technical knowledge, foresight, and understanding of the subject which can provide the right information as well as results.
“I have absolute reliance on all of you,” he said, adding that cooperation of the Central Bank staff would be sought to provide guidance to the Monetary Board to take the right decisions, at the right time.
“I know all of you have been trained – people with qualifications – and understood the economic models of the world. We would as the Monetary Board seek your guidance. If we have to find someone from outside, I don’t think that is doing justice to all of you who have been involved in the Sri Lankan economy and who have got all these qualifications as well,” Cabraal told the staff after assuming duties.
He also called on the staff to believe in themselves and believe in the fact that together economic stability could be achieved.
“We have seen these challenges and sometimes been daunted by those, but I think it is time for us to understand that these challenges have to be fixed by us. I want to assure you that I’m keen to ensure that people who have various strengths are given the space to carry out their duties. It will be the main foundation on which the management would be structured.”
Cabraal also commended the successive Governors for continuing the practice of the Roadmap which was initiated by him. “We now need to continue earnestly to ensure that more and more people could subscribe to the Roadmap and be abide by it. It will also provide our message to the rest of the world on what exactly would take place in the Central Bank and the economy.”
Cabraal’s statement
Prior to addressing the staff and media, separately in a statement Cabraal also said the following:
“I am extremely privileged to lead the Central Bank once again and deeply humbled by the trust and confidence reposed in me by the President, Prime Minister and Finance Minister to take up this responsibility. I also deeply appreciate the good wishes that I have received from thousands of our countrymen. I will assure all of them that they will not be let down, and the economy will be steered towards continued stability. I also look forward to the close cooperation of the wonderful team of persons at the Central Bank as well the support from all stakeholders with whom I will have early consultations. The Government, bankers, importers, exporters, lenders, borrowers, investors, developers, service providers, industrial businesses, exchange houses, retailers, wholesalers and most importantly, the people of Sri Lanka must experience economic stability. It is then that undue fears are allayed, and damaging expectations are not escalated. To achieve that objective, the Central Bank will need to provide clear and firm guidance to all economic stakeholders, particularly at turbulent times such as the current times. Therefore, the Central Bank's first and urgent priority under my watch will be to provide clarity with regard to the movement of Sri Lanka's macroeconomic fundamentals in the desired path and thereby ensure stability in the financial sector. Towards that goal, the Central Bank will need to take the required steps that will reflect its own commitment towards that objective and will therefore soon announce a policy package in the form of a short-term Roadmap that could then be followed by all stakeholders.”
Cabraal seen receiving his letter of appointment from President Gotabaya Rajapaksa on Monday in this photo released by President’s Media Office yesterday
