Thursday May 16, 2024
Thursday May 16, 2024
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By Nisthar Cassim
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Outgoing Central Bank Governor Prof. W.D. Lakshman
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Veteran academic Prof. W.D. Lakshman yesterday admitted recent “unpleasant events” forced him to advance his resignation as the Governor of the Central Bank, but he stopped short of being specific.
“I have now been in this position for nearly two years. My intention and plan was to tender my resignation papers on my 80th birthday coming next month. The unpleasant events over the last week or 10 days have shortened my intended service period by about six weeks,” Prof. Lakshman told journalists via a virtual briefing in which he said he would step down on Tuesday (14).
His resignation comes less than two years after he was appointed as the 15th Central Bank Governor on 24 December 2019.
Despite probing questions from journalists, Prof. Lakshman did not want to “open up,” although he added that he may in the future if and when he so decides. However, a read-between-the-lines of his remarks yesterday carried undertones of his apparent disappointment or frustration.
He referred to society or the system of party politics as not having systemic commitment to move out of the “developing” status, and not being able to agree on a clear policy framework and to stick to it for a long enough period of time. He also found the lack of widespread acceptance of what he called “political economy ideology”.
Prof. Lakshman noted that because of certain natural, human and institutional factors beyond his control, intended results could not be achieved on a consistent basis during his tenure. “How great it would be if decision-makers join together to achieve one common target and work together towards that target with commitment,” he emphasised.
A successor has not been yet named or appointed whilst speculation is it will be Money and Capital Markets State Minister and former two-time Central Bank Governor Nivard Cabraal.
In his comments to the media yesterday, Prof. Lakshman said he was offered the post of Governor way back in 2004 as well when he was still the Vice-Chancellor of University of Colombo, but declined due to personal reasons.
However, he accepted the invitation in 2019 on the suggestion that he could serve for a year as he was involved in the drawing up of Gotabaya Rajapaksa’s economic policy framework document ‘Vistas of Prosperity’ ahead of the 2019 Presidential Election.
Having described work connected to the policy document as a “pleasant experience,” he said it was an involvement that was merely due to his ideological commitment to the policy program that was being developed.
“There was absolutely no expectation of post-election benefits in my participation in this activity. About two weeks before I assumed duties as Governor, there was, totally unexpectedly, an inquiry from Secretary to the President Dr. P. B. Jayasundera on whether I could take over the responsibilities of Central Bank Governor. This was totally unexpected and came as a complete surprise,” Prof. Lakshman recalled yesterday.
He said during the near-two-year period, “I have acted conscientiously to guide and administer and give leadership to the Central Bank, remaining within the economic and monetary policy framework, which I believe to be correct.”
“As I have believed and acted all my life, in the Central Bank also, I have not taken any decision against my conscience. The fundamental moral principles which guided me have been honesty, integrity, and financial discipline. There is a political economy ideology which I believed, and continue to believe, to be correct. This has conscientiously guided my teaching in 45 years of my university academic life,” Prof. Lakshman said.
He said that he realised that only a minority of economists subscribed to these political and economic perspectives. Among the large numbers of educated professionals in the Central Bank also, the conditions are no different.
“I must mention, obviously not with any intention of hurting the feelings of anyone, that getting things done according to my policy perspectives was not indeed an easy task,” he added.
Prof. Lakshman acknowledged he was stepping down from one of the most important and respected positions in the country. “I have worked tirelessly day and night to conscientiously perform my duties and functions with the greatest degree of diligence. But, because of certain natural and human factors beyond our control, all the intended results of these efforts could not be achieved all the time.”
He said the most common such factor that affected work and its results had been the several waves of COVID-19, starting from just three months of assuming duties. “There were, of course, various other human and institutional factors also responsible for difficulties to achieve best results. Thinking of these and contemplating corrective measures to be taken, there were many days and nights I spent under stress,” he said.
“I do, therefore, think that my having to give up the Governor position, even under these not-so-perfect conditions, is indeed a blessing in disguise. Among many others in my family and close friends, there is also my family doctor who said this,” Prof. Lakshman added.
He also revealed that he was offered the position of Sri Lanka’s Alternate Executive Director at the International Monetary Fund in Washington for one year, post-resignation. He described the offer as extremely attractive in terms of remunerations and other conditions, but said: “I have declined this attractive offer as this is against principles I cherish. I eagerly look for the leisure I will get after this retirement to be usefully spent on academic writing, which has been postponed.”
Repeating comments made several times as the Governor, Prof. Lakshman said at the time he studied, Sri Lanka was referred to as an underdeveloped or a developing country, and noted: “We must be ashamed about ourselves for having to continue even today to call ourselves a developing country.”
“What I wanted was to become an active partner in the effort being taken to move out of this ‘developing’ status. But over nearly the last two years, I have realised that our society or our system of party politics does not have a systemic commitment to this objective,” he opined.
“There is particularly the issue of society not being able to agree on a clear policy framework and to stick to it for a long enough period of time. This is why we lag behind, when many countries behind us are, one after the other, overtaking us in the race to achieve ‘development’. I have many things to say about matters briefly noted above,” Prof. Lakshman said.
Despite an honest retrospect, the outgoing Central Bank Governor extended his gratitude to President Rajapaksa, Secretary Dr. P.B. Jayasundera, Monetary Board members, Central Bank officials and his immediate staff. He also thanked his family for their moral support during the “difficult and trying period”.
“The Central Bank has taught me a great deal more than what I learnt from universities about economic theory and practice and monetary theory and practice. If I could write a monograph on this subject, it will, I am sure, be extremely useful,” Prof. Lakshman said.
In addition, he said the Central Bank Society had taught great lessons about human nature and human behaviour – lessons equally, if not more, valuable than knowledge about economic and monetary subjects.
“I have also learnt how great it would be if decision-makers join together to achieve one common target and work together towards that target with commitment. I would like to conclude this brief retirement speech by wishing good luck to all in the Central Bank and to the new Governor,” Prof. Lakshman added.
