Sri Lanka’s central bank needs new Governor without delay

ECONOMYNEXT – Sri Lanka’s central bank needs a new Governor to be in office by preferably by end-of-day June 30, so that officers will have the authority to legally carry out their functions and ensure the markets operate smoothly, analysts say.

The term of office of Sri Lanka’s controversial central bank Governor Arjuna Mahendran who is under a parliamentary probe for alleged irregularities on bond auctions, end on June 30.

Governor Mahendran this week said he will not seek re-appointment amid a growing outcry from civil society activists and parliamentarians from both sides of the house. He has denied wrongdoing.

On Friday at a meeting of the Monetary Board, which is the governing authority of the central bank an attempt was made to appoint Deputy Governor P Samarasiri as Senior Deputy Governor, who will have the same powers as the Governor, sources aware of the matter say.

However the move was opposed on the grounds that there is no provision to appoint a Senior Deputy Governor, while the Governor remained in office or in the country.

Civil society activists have also called for Samarasiri not be appointed to any acting position as he had attempted to defy the parliamentary committee and deny information related to alleged bond scams.

Even if a person was appointed Senior Deputy Governor and the Governor went on leave, his authority would also lapse on June 30, activists say, according to section 24 of the Monetary Law Act.

At the moment the most senior Deputy Governor is Nandalal Weerasinghe. However during the tenure of Governor Nivard Cabraal, Ranee Jayamaha, who was not the most senior Deputy Governor had been appointed Senior Deputy Governor.

And that practice had been continued by Governor Mahendran.

The President on the recommendation of the Finance Minister has to appoint a person for a six year term. It cannot be an acting position according to Section 13.





However there is speculation that a person may be recommended to the President who will resign on order to bring back Mahendran at a later date after a parliamentary probe is completed.
When the previous Governor Nivard Cabraal resigned, the monetary board designated a senior deputy governor, until a new Governor was appointed by President Maithripala Sirisena to complete his term.

Those who are familiar with the operations of the central bank say, when the term of office of former Governor A S Jayewardene ended, the incoming Governor Sunil Mendis was appointed by 6.00 pm.

Though the central bank has Deputy Governors heading various departments, they act on the authority of a Governor.

There are serious doubts whether the parliamentary committee can complete its report before June 30. (Colombo/June24/2016)


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