5 July 2016 10:31 am
Newly appointed Governor Indrajit Coomaraswamy addresses the Central Bank staff
The incoming Central Bank Governor yesterday emphasised that the Central Bank would go back to the basics of creating sound macroeconomic fundamentals in an independent, technical and reputable manner in order to take the country into a path of development. “We need to, as a Central Bank, to get away from the cycle of stop-gap policies, of creating artificial booms through misaligned policies. We need to set a good framework for our economy,”
Dr. Indrajit Coomaraswamy said during his inaugural address to the staff of the Central Bank. He said that much of the post- 1948 history had seen economics being sacrificed for political gain. Dr. Coomaraswamy has been seen often quoting Lee Kuan Yew, who said, “Sri Lankan democracy is a periodic auction of non-existent resources”. The past governorship saw interest rates being kept low and the rupee being defended at artificially high prices between the elections to induce demand and the rupee being let go immediately after the elections.
“It’s our job to convince the politicians that good economics is good politics. That’s not to say we should be criticising the government. There are channels where we can get independent advice to the government,” Dr. Coomaraswamy said. He said that he had advised both President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe about the political independence awarded to the Central Bank under the Monetary Law Act and that Sirisena had advised him to not fear anyone while discharging his duties. Dr. Coomaraswamy added that the Central Bank has a big role to play in creating a platform through which Wickremesinghe’s vision for the country’s economy could be achieved. However, the questions that remain are whether the public would become more educated about the longterm effects of the policies on the economy, potentially making future macroprudential policy decisions unpopular or having the monetary policy slaved to the weak fiscal policy,
which is easily influenced by politicians. Dr. Coomaraswamy said that the Central Bank would set quarterly, yearly and three to five-year plans going forward, the success of which would depend on the cooperation of the Central Bank officials, who will have to set aside personal differences. “The captain is only as good as his team.
However, smart or clever the captain is, unless his team has talent and there’s teamwork, it’s not going to work,” he said, drawing on the experience of being a former Sri Lanka Rugby Captain. He added that he would expect all officials to fulfil their duties with integrity, technical excellence and professionalism and if he is found wanting in these areas, to make it known through the proper channels, as the Central Bank should be an institute open to constructive criticism and debate. “I’m acutely aware that a primary responsibility, arguably the primary responsibility of the governor, is to uphold its reputation and credibility. I will assure you that I would do my utmost at all times,” Dr. Coomaraswamy said. The tenure of former Governor Arjuna Mahendran was marred with controversy.
The country’s largest conglomerate John Keells Holdings PLC (JKH) announced that Dr. Coomaraswamy had tendered his resignation from the board of directors in view of his acceptance of the position of Central Bank Governor. Dr. Coomaraswamy held no shares in John Keells Holdings PLC. He is also a Director of Tokyo Cement Company (Lanka) PLC.
