CBSL chief responds to accusations being made against the central bank

The Governor of the Central Bank, Dr. Nandalal Weerasinghe says that the Central Bank is the independent authority to determine the monetary policy, which is considered the country’s finance, although the final authority to public finance rets with the parliament.

Dr. Weerasinghe clarified that public finance is only taxpayers’ moneys, while the finance of the country is the monetary policy.

Speaking in an event held in Colombo yesterday (Nov. 22), the Governor emphasized that several allegations are being leveled at the Central Bank during the budget debate these days stating that the Central Bank has contracted the economy and as a result, people are suffering.

“People in Sri Lanka and even businesses in Sri Lanka think that anything you need concession, you should go to the Central Bank and ask them.”

“There’s a reason for that. In the past, Governors of the Central Bank have been talking about anything under the sun, without the monetary policy”, Dr. Weerasinghe said.

The central bank chief further pointed out that he is the person who is in charge of the monetary policy and that he would not like to creep into someone else’s authority, interest of fiscal policy, and that likewise he too does not like, as an independent central bank, fiscal authority dominating his policy making.  

However, he added that obviously there has to be a co-ordination between fiscal and monetary policy for overall macro stability.

“Authority to impose taxes, authority to control expenditure, final authority to the public finance is the parliament. That is why today you see today the budget was passed by parliament that people who were elected they passed the budget. Public finance is only taxpayers’ money. Country’s finance is the monetary policy. But when it comes to country finance it is the central bank independent authority to determine what interest is for the whole country you are supposed to pay. What’s the relevant appropriate exchange rate for you to be able to not only for the government, but for the whole country, private sector, private everyone.”

The Governor also emphasized that it is the independent authority of the Central Bank to determine the interest rates for the whole country, not only for the government but for the whole country including the government sector, private sector and everyone.

“People interfere the parliament’s responsibility for public finance as parliament has the authority for all finances, but the parliament has authority only on the public finance”, he claimed.

Further, Dr. Nandalal Weerasinghe concluded that the way people are challenging the Central Bank is basically the lack of understanding on the role of the Central Bank.