New Central Bank Governor is a great scholar and an independent economist

During his tenure at the leading universities in the island, he has taught thousands of students, and they are now serving the country as well as holding prestigious posts overseas

President Gotabaya Rajapaksa has made another excellent decision by appointing Deshamanya Prof. W.D. Lakshman as the 15th Governor of Central Bank of Sri Lanka. He assumed duties in his new post on 24 December. 

Prof. Lakshman is a well-known scholar, prolific writer, a fearless economist, and an excellent administrator. Moreover, he is a dedicated person with a clear vision for the country. During his long academic career spanning over five decades, he has mentored many of the active economists that this country has produced. I happen to be one such lucky student during his time at the University of Colombo (UoC).

He is a deep unconventional thinker, holds the utmost standards in his professional life, and liked by many in the policy circle. He is also a rare political economist in the country with a deep understanding of how State, market, and civil society interact with each other.   

He belongs to the precious few who adorn the history with their distinct contributions in the fields of economics and political economy. With all the endowments, I am sure he will enlighten the Governor position and be able to take the Central Bank to the next stage of excellence.

Prof. Lakshman obtained his Bachelor’s Degree in Economics from the University of Ceylon at Peradeniya, where he had the honour of belonging to the pioneer Sinhala medium batch of students. He concluded his undergraduate studies in 1964 with Second Class (Upper Division) honours. 

He commenced his academic career at his alma mater when, soon after his graduation, he was invited to join the academic staff of the Department of Economics. He successfully defended his thesis titled ‘Terms of Trade, Public Policy and Economic Development of Ceylon, 1948-1958’ and gained a DPhil in Economics from the University of Oxford, and returned to teach at his alma mater which became University of Peradeniya (UoP) in 1978. 

It was after working there for 17 years that he left the UoP in 1981 to join the UoC as the Professor of Economics. The pinnacle of Professor Lakshman’s academic career was the appointment as Vice Chancellor of the UoC. 

On retirement, he was awarded the Professor Emeritus status and was later honoured by the UoC with an honorary Doctor of Letters (D.Litt.) in 2008. In 2005, the President of Sri Lanka decorated him with the Deshamanya national honours for his distinguished contribution to the country’s education.

During his tenure at the leading universities in the island, he has taught thousands of students, and they are now serving the country as well as holding prestigious posts overseas. One of the most important contributions by Prof. Lakshman to the country was setting the trend by starting postgraduate programs in the UoC, beginning with the Postgraduate Diploma in Economic Development (DED) in 1985 and followed by the Masters in Economics.  

The Central Bank has already shown its capability in managing single-digit inflation since February 2009. Given this situation, keeping inflation in the 4-6% range may be a feasible target. However, achieving 6.5% economic growth and maintaining a single-digit rate of interest and a stable exchange rate over the medium term is quite challenging

I wrote my first postgraduate thesis under his abled supervision and became one of the early beneficiaries of postgraduate education commenced by him. The postgraduate programs in Economics in UoC since around 1987 were supported by the Institute of Social Studies (ISS) in the Netherlands, under a Dutch grant for development of Economics education in Sri Lanka.  Many young graduates in Economics, recruited to serve the Department of Economics in UoC, were trained at doctoral level under this UoC – ISS project in Economics. They are now leading the Department of Economics and contributing to policy dialogues in different fields of economics and development providing ample justification for the work Prof. 

Lakshman played in training the next generation of economists. 

Apart from his academic and administrative skills, it is noteworthy how he used his excellent personal relationship skills to gain support from students, administrative staff, academics, and non-academic staff to run the university smoothly. He transformed the places and individuals when and where it is most needed through his unconventional thinking. 

I understand that during his tenure as Vice Chancellor, there was no students’ unrest, a rare situation in our university system. He has left behind a significant legacy in terms of institutional development in terms of the Career Guidance and Staff Training Units he set up at the UoC in his tenure as Vice Chancellor.

He has held many positions nationally and internationally. Many positions at UoC including Vice Chancellor; CEO (Vice-Chancellor) of Sanasa University; Chairman of the Institute of Policy Studies (IPS); a member of the National Economic Council during the first half of the 2000s and later during 2007-9; Senior Advisor of the Ministry of Finance and Planning (2008-10); Chairman of the Presidential Commission on Taxation (2009-10); President of the Colombo Plan Council, 2009. 

At different times in his academic career, he held visiting professorial positions in the Institute of Social Studies, the Hague in the Netherlands; in Ryukoku University, Kyoto, Japan; and in Saga University, Saga, Japan. We, at the International University of Japan (Niigata, Japan), were lucky to have many inspiring lectures by him on many occasions. 

Prof. Lakshman has shown his prowess in research and writing as well. His professional writing, both in Sinhala and English, is impressive. His books, monographs, articles span widely differing areas of economics. 

Among his numerous publications, the following are some books edited and published: (a) Dilemmas of Development: Fifty Years of Economic Change in Sri Lanka, Sri Lanka published by the Association of Economists, Colombo, 1997; (b) Sri Lanka’s Development since Independence: Socio-Economic Perspectives and Analyses, New York: Nova Science Publishers Inc. 2000; (c) Distant Neighbours: Fifty Years of Japan Sri Lanka Relations, Colombo: Faculty of Graduate Studies, University of Colombo, 2003.

It was during my high school time that I came to know Prof. Lakshman, through his Arthika Vislashanaya, an excellent textbook available to high school economics students at that time. I became a fan of him at the time while setting myself a target of learning economics and then becoming a university professor. 

I entered the University of Colombo in 1981, and he joined the Department of Economics in the same year, which was such a lucky coincidence in my life, enabling many of us to study economics under his abled guidance. 

Professors Sirimal Abeyratne, Amala De Silva, Athula Ranasinghe, Dr. Harsha Athurupane, and I were among his earliest groups of students in Colombo. 

They all joined the Department except me, and Harsha later joined the World Bank. Prof. 

Lakshman was an icon, and a dedicated teacher, and his lectures were always so absorbing and inspiring.  I am sure they will all sincerely join me in wishing him good luck in his new endeavours. 

The new Troika and challenges for the new Governor

I want to review and post some challenges for the new Governor. According to the National Policy Framework (NPF), the policy document of the new Government, macroeconomic target for 2020-2025 are: to achieve an economic growth at 6.5% or higher; to exceed per capita income of $ 6,500; to maintain the rate of unemployment at less than 4%; to maintain the rate of annual inflation below 5%; to keep budget deficit at less than 4% of GDP; to maintain stable exchange rate; and maintain a single-digit rate of interest. 

The Central Bank has already shown its capability in managing single-digit inflation since February 2009. Given this situation, keeping inflation in the 4-6% range may be a feasible target. However, achieving 6.5% economic growth and maintaining a single-digit rate of interest and a stable exchange rate over the medium term is quite challenging. 

All those targets are possible to achieve if the Ministry of Finance (responsible for fiscal policy) and the Central Bank (responsible for monetary policy) can effectively coordinate with the political authority of the country. This requires a new Troika consisting of the new Governor of the CBSL, Secretary to Ministry of Finance, and the Secretary to the President of the country. 

If this new Troika can engage in a productive dialogue, the Government can realise the targets of NPF. Here it is worth mentioning the original Troika consisting Basil Rajapaksa, at that time Senior Advisor to the former President; Mahinda Rajapaksa, former Defence Secretary Gotabaya Rajapaksa; and Lalith Weeratunga, who was the Secretary to then-President Mahinda Rajapaksa. 

They were managing in the last phase of the separatist war with Indian Troika, which consists of then National Security Advisor M.K. Narayanan, then Foreign Secretary Shankar Menon and then Defence Secretary Vijay Singh. It is quite a known fact that the original Troika could work effectively because of the unique nature of the dialogue. 

I came to know excellent chemistry of original Troika when I met current President Gotabaya Rajapaksa and Weeratunga in a meeting on ‘Economic Policy Dialogue: A Way Forward for Sri Lanka’, organised by the Pathfinder Foundation sometime in July 2017. Let’s hope the new Troika will have the courage to engage in a friendly and professional conversation and bring the country forward.

(The writer is a Professor in Economics, International University of Japan, Niigata, Japan and the President of the Association of Sri Lankan Academics in Japan)