CBSL Governor likely to get service extension

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Sri Lankan President Gotabaya Rajapaksa will extend the term of the Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe for a fresh six-year term, effective 1 July 2022, a government spokesman told Finance Today.

Accordingly, with the consent of the PM and the Minister of Finance Ranil Wickremesinghe, the President will issue the relevant letter of appointment in the coming weeks, he predicted. 

Meanwhile, the International Monetary Fund (IMF) team is scheduled to visit Sri Lanka next week to commence the second round of (policy) discussions with the local authorities.

Many economists including the corporate sector are of the opinion that Governor Dr. Weerasinghe’s re-appointment will be vital for this second round of crucial discussions with the IMF to arrive at a decision on Sri Lanka’s level of debt sustainability  and launch a debt restructuring programme.

Initial technical level discussions with the IMF were held virtually due to Sri Lanka’s ‘May 9 civil unrest’ and related IMF travel advisories.

Sri Lanka has taken steps to restructure foreign debt. If it is to succeed, the consistent government policies and institutional stability of the CBSL, the MoF as well as the Cabinet will be a vital factor.

At present there are social and other media campaigns spreading negative sentiments against the Governor, Dr. Weerasinghe and there was much speculation that the term of the Governor would not be extended beyond 30 June. According to an independent source this situation was stemming from perceived conflicts between vested parties and the Governor.

However, the Governor of the CBSL had recently quoted on CBSL social media sites such as Twitter handle and Facebook and stated that those speculative reports were false and baseless and that there are no rifts between the PM and himself.

According to Rule 13. (1) of the Monetary Law Act, a term of the Post of the Governor of the CBSL is equal to a period of six years. The present six-year term ends on 30 June 2022 and in this term, Dr. Weerasinghe was appointed to the Governor’s post on 7 April 2022 for the balance period of this term after the resignation of the previous Governors Dr. Indrajith Coomaraswamy, Prof. W. D. Lakshman and Nivard Cabraal, as per Rule 13. (2) of the Monetary Law Act.

As soon as Dr. Weerasinghe was appointed as the Governor he took steps to initiate a balance of payments assistance programme with the IMF and in collaboration with the MoF, announced the debt standstill for external debts. Subsequently, he took steps to restructure external debts and appointed financial and legal advisers. The country’s exchange rate has also been maintained at a controlled level of flexibility, giving it some credibility. He also banned the opening of open accounts for imports and took steps to reduce the black or gray market activities for the safeguard of the country’s limited foreign reserves while curtailing the import demands via optimising his regulatory powers.

By Ishara Gamage

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