Sri Lanka opposition to move parliament in bid to remove CB Governor: report

COLOMBO (LBO) – Sri Lanka’s main opposition will present a motion to parliament asking for the Central Bank Governor Arjuna Mahendran to be removed, over a controversial bond deal that benefitted his son-in-law, a media report said.

Sri Lanka’s Daily Mirror newspaper quoted Bandula Gunawardene, an opposition legislator as saying that there was a plan to hand over a motion to Parliamentary Speaker Chamal Rajapaksa asking the Central Bank Governor to be removed.

It is not clear whether the Parliament can remove the Governor of the Central Bank who has security of tenure.

Gunawardene, a former Deputy Finance Minister was quoted as saying that a loss of over 40 billion rupees had been caused to the state following the deal.

The sharp spike in interest rates that came with the controversial 30-year bond sale had pushed up the interest costs in subsequent bond sales which resulted in extra interest of over 40 billion rupees over the tenor of the bonds, according to one estimate.
 
However analysts say it may be a little exaggerated as some of the starting interest rates appeared to be lower than market and in any case the government ratcheted up domestic borrowing, which would also have pushed up interest costs to some extent.

The current administration is scheduled to present an inquiry report on the deal to parliament next week.
 

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