Highly respected economist Prof. Razeen Sally this week revealed clear attempts by certain powerful individuals in the government to undermine the good work of the incumbent Central Bank Governor Dr. Indrajit Coomaraswamy and re-politicize the institution, which, according to him, must be condemned and resisted with full force.
Of late, the country’s belligerent Finance Minister Ravi Karunanayake accused the Central Bank of failing miserably on many fronts as he thinks the institution had deviated from its responsibilities under the law and also allowed it to be politicized, a charge denied by Dr. Coomaraswamy.
According to Karunanayake, the Central Bank should confine itself to a regulatory and monitoring role and should not try and tell the government how to run the country’s economy. He said the regulatory reforms to that effect would be brought shortly.
“Of course there are governing politicians who seek to undermine him (Dr. Coomaraswamy) and to eat away the Central Bank’s authority and to re-politicize the Central Bank,” Prof. Sally told a public seminar organised by Advocata, an independent public policy think tank, jointly with the business magazine, Echelon, in Colombo.
Dr. W.A. Wijewardena, a respected economist and a former Central Bank Deputy Governor, also recently said such attempts by the governing authorities to belittle the Central Bank’s independence tantamount to a “disaster”. “The tone of the minister (Karunanayake) implied that the government was to reduce the independence of the Central Bank and make it another department in the Finance Ministry.
If done, this would be a disaster and would go against the accepted principles of central banking. The loser at the end would be the government and the people of the country,” Dr. Wijewardena cautioned in his weekly column in our sister paper Daily FT, this week.