Role of Central Bank and Nivard Cabraal

In the “Insider” article in the FT of 11th May 2016, it has been rightly mentioned that the Central Bank Governor’s role is to “provide advice to the government, and keep a good eye on our economic fundamentals”. If that is the yard stick it would be an opportune moment to consider the contribution of Ajith Nivard Cabraal, who served as the Governor from 2006 to 2014.

During that period, as per the Central Bank Report of 2015, Cabraal had led the Sri Lankan economy from a US$ 24 billion economy in 2005, to an economy of US$ 80 billion by 2014. By 2014, inflation had been controlled at single digits for 6 years. From 2005 to 2014, GDP per capita had increased from US$ 1,240 to US$ 3,850. The debt to GDP ratio had declined from 91% to 70%, even with the massive infrastructure development that the country experienced. Sri Lanka’s foreign reserves had increased from about US$ 2 billion to more than US$ 8 billion. The Rupee had been kept stable and steady, a feat which Cabraal’s successor has failed miserably. It is also a well-known fact that Cabraal is held in high esteem by foreign investors who invested confidently in Treasury bills and bonds during his tenure, while he cleverly steered the economy through the global financial, oil, food, crises as well as the Seylan Bank crisis. He did not transmit any of those shocks to the economy, and the ordinary people did not even know that these challenges were posing problems! He also never grumbled or dodged issues. He had enormous energy and a positive approach even at the height of the war which would have caused heavy stress to the economy.  

Nivard Cabraal was an excellent communicator who was always well prepared. He also commanded enormous admiration from the Central Bank staff, the private sector and government sector, to whom all he was readily approachable (as mentioned by “Insider”). All who came in contact with Cabraal were often amazed by his decisiveness and his ability to deal with complex issues, like monetary and fiscal policy, with a practical and sensible approach.  While it is true that Cabraal was a “politician” as stated by the “insider”, it must also be mentioned that Cabraal was one of the most brilliant Chartered Accountants that this country has ever produced. He carried away many prizes at the Chartered examinations during his student days at Ford Rhodes (now KPMG), and was also the youngest elected President of the Chartered Institute during which time, he contributed immensely to the accountancy profession. 

Through all this, Nivard Cabraal made an outstanding contribution to the country and left an indelible mark in the Sri Lankan economy. Not surprisingly, his vociferous political detractors who criticized him at every turn when he was Governor, have not been able to even come close to delivering results like Cabraal did, when he was in charge. Sri Lanka sorely misses Cabraal’s services at this current time when the economy has been reduced to shambles in such a short time after he left. Whatever any politician says now, history will accord Ajith Nivard Cabraal his rightful place as one of the best Central Bank Governors and economic leaders that Sri Lanka has ever had, when the country’s history is written.

Rex FernandoRetired Banker