Monetary board to micro-manage Sri Lanka’s central bank sans Governor

ECONOMYNEXT – The Monetary Board, the governing board of Sri Lanka’s central bank is expected to micro-manage the institution approving key decisions, until a new Governor is appointed by the administration, persons familiar with the agency’s operations say.

The term of Arjuna Mahendran as Governor ended on June 30, without a new appointment despite President Maithripala Sirisena tweeting Wednesday that a new Governor would be in place in the coming hours.

On Thursday evening the Monetary Board met in emergency sessions.

Though there was some speculation that an ‘acting Governor’ will be appointed in the form of a Deputy Governor being promoted to ‘Senior Deputy Governor’ with chief executive powers at the last minute by the Monetary Board, there was no statement to from the central bank to that effect.

The Monetary Board is now expected to approve key decisions of central bank departments to give authority for officials in a micro-managing operation, until a new Governor is appointed.

With the ending of the term of Mahendran, the five-member Monetary Board has now been reduced to three. Earlier in the year the term of R A Jayatissa, an appointed member, ended with no replacement.

Yesterday, three members, Mahendran, Treasury Secretary R H S Samartunga and M Ramanathan sat, making up the required three member quorum.

The fourth member, CPR Perera is abroad. Until he returns to the country there is no quorum for the Monetary Board to meet physically.

It is expected that the depleted Monetary Board will use other means to approve decisions. While it is possible to run the agency in that fashion for a few days, it will not be practical to run it for a long period on that basis, central bankers say.

The Central Bank’s Executive Officer’s Union has previously written to the Monetary Board warning of a possible anarchical situation arising unless a "qualified person with outstanding competence and unquestioned integrity" is not appointed from July 01. (Colombo/July01/2016)

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