Central Bank cannot make popular decisions - CBSL Governor

by Zulfick Farzan 23-11-2022 | 3:14 PM

COLOMBO (News 1st) - Sri Lanka's Central Bank Governor Dr. Nandalal Weerasinghe said that the Central Bank cannot make popular decisions, and making popular decisions is the job of the government.

"When you listen the budget debate these days, there are a lot of allegations on the Central Bank saying that CBSL contracted the economy and this model is not sustainable, and as a result the people are suffering," he said while speaking at the 40th Annual General Meeting of the Sri Lankan Apparel Exporters Association in Colombo on Tuesday (22).

He said as the Governor of the Central Bank he is the person who is in charge of the monetary policy, and would not like to creep into or encroach someone else's authority in terms of the fiscal policy. "I also don't like, as an independent Central Bank, the fiscal authority dominating my policy making."

He further noted that the a key important principle in any successful economy, is the independent Central Bank, independent Treasury which are looking at their own objectives and having policies.

"The final authority on public finance is the parliament, like in any other country. That is a people's choice, on how they would like to have taxes, how they would like to have their expenditure, the fiscal policies is a choice by the democratically elected government in this country. That is why we see today the Budget was passed in Parliament. The people who elected the president passed the budget. They are the one's who take decisions on taxes and expenditure behalf of you. But, when it comes to monetary policy it is not Public Finance," he added.

He went on to note "Public Finance is only tax payers money. Country's finance is the monetary policy. Parliament has the authority only for the tax payers money and how that is allocated between expenditure and revenue, and borrowing on behalf of future tax payers. When it comes to country finance it is the central bank, the independent authority, will determine the interest rates for the whole country. That is why the Central Bank should be independent."

The Central Bank cannot make decisions on a democratic basis or a popular basis, he noted.

The Central Bank Governor also went on to note that the Parliament, or Cabinet, or Government should not be imposing influence on the Central Bank's independent decisions. "But, we need to have proper accountability, as a public institution. That is where we are accountable to the parliament. You need to have independent with accountability."