What is expected of Central Bank Governor?

By Insider

Before Nivard Cabraal assumed office, 90% of the Central Bank Governors have been very astute and professional Central Bankers who have clearly stayed out of the media and any controversy. They spent most of their time providing advice to the Government and keeping a good eye on our economic fundamentals.

The only Governor who was somewhat controversial was one of the cleverest boys to ever come out from Trinity College – Neville Karunathilake. His sympathies were however with the UNP. A.S Jayawardane despite his healthy relationship with Ranil Wickremesinghe kept away from getting involved in Government matters and UNP politics.

It was Nivard Cabraal who politicised the office of the Governor. Some of his decisions went beyond what was expected from a Governor. He virtually made the Central Bank an extension of Temple Trees. To be fair by Nivard Cabraal, it must be said he was approachable, refreshing and did a lot of good things to improve the effectiveness of the Central Bank, unlike the current Governor.

Cabraal’s problem was he was an ex-politician and therefore badly wanted the show and to market himself. He had several blue-eyed boys as his cheerleaders.

On the other hand, Arjuna Mahendran seems to have got embroiled himself from one controversy to another. In addition to the two or three bond issues which have still not been fully investigated, the latest being the suit he bought himself for $ 11,000, using State funds.

Using State funds was nothing new to him, he had similar issues while he was Chairman BOI. This latest controversy has certainly angered the President and many SLFP ministers, according to sources close to him. In Government the abuse or misappropriation of Rs. 100 is a jailable offense. Now people are watching how the Government would react to this episode. Nothing will be done from the Prime Minister for sure, given the way he defended him.

When Mahendran was appointed there was controversy about his appointment itself on two fronts; firstly he was not a Sri Lankan citizen and secondly due to his son-in-law’s alleged involvement in an irregular share transaction involving the EPF which was supposedly pending an investigation.

The second issue that was raised at the time of his appointment was certainly a problem since the EPF is managed by the Central Bank which he now heads and any investigation will have to meet the test of independence and comprehensiveness. To date not a single person has been prosecuted. Dr. Harsha de Silva does not even to refer to this now in public.

The latest controversy which is much more worrying is because it shows the lack of depth and seriousness of the person holding the office of the Governor. The timing is surely bad for Mahendran. His contract expires in June. He will have to face a hostile SLFP group at the high post committee who would like to see the emergence of a down-to-earth, competent and credible professional to lead the CB.

This may be the opportunity for the Government to bring in a professional like Dr. Saman Kelegama or Dr.W.A. Wijewardena who had been shouting hoarse about the mismanagement in the CB, to bring back credibility to our nation’s finances. This would certainly be our last chance to bring back Yahapalanaya into our financial system in the country.

May the Triple Gem bless Mother Lanka and help our leaders to think straight again!