Finance Minister’s involvement in respect of the appointment of the Central Bank Governor

Recently, I watched an interview by a reporter of a television channel with Minister of Finance Ravi Karunanayake, where a question was addressed to the Minister regarding the appointment of the Governor of the Central Bank for a further period after the expiry of the present period of office of Arjuna Mahendran.

To my great surprise, the Minister stated that he had no role to play with regard to the appointment of the Governor of the Central Bank.

I reproduce below the provisions of the Monetary Law Act No. 49 of 1950, applicable to this matter.

“12. (1) The Governor of the Central Bank shall be appointed by the President on the recommendation of the minister in charge of the subject of finance;

(2) The Governor shall devote his full professional time to the business of the bank; and accordingly the Governor shall not accept or hold any other office or employment whatsoever, whether public or private, and whether remunerated or not: Provided, however, that nothing in the preceding provisions of this subsection shall be deemed to prevent the Governor from accepting or holding any academic office or position or any office or position in an institution or organisation, established for the purpose of carrying on research in the subjects of economics, money, banking, statistics and finance, or from being appointed to be or acting as a member of any commission constituted under the Commissions of Inquiry Act for the purposes of any inquiry relating to monetary, banking, financial or general economic matters or questions affecting the national welfare of Sri Lanka, or of any council, committee, or other body investigating or examining, or advising upon, any such matters or questions.

(3) The Governor shall receive such salary as may be fixed by the President on the recommendation of the minister in charge of the subject of finance.”

Although the Central Bank has been assigned as an institution which comes under the purview of Minister of Policy Planning, Economic Affairs, Child, Youth and Cultural Affairs in accordance, with the Gazette Order made by the President, in terms of assignment of powers and functions under Article 44 of the Constitution of Sri Lanka, the consequential amendment to the Monetary Law Act has not been made still.

Therefore, in accordance with the above provision of the Monetary Law Act, the Minister of Finance has to participate in the decision making relating to the appointment of the Governor.

It is unfortunate, that in the 19th Amendment of the Constitution, the post of Governor of the Central Bank has not been included in Part I or Part II of Article 41c of the Constitution, which necessitate the approval of the Constitution Council for the appointment, like in the case of the appointment of the Auditor General or the Attorney General.

Senehe Perera