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Sri Lanka central bank chief to step down

Jun 27, 2016
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The Governor of the Central Bank of Sri Lanka (CBSL) Arjuna Mahendran has stepped aside following more than a year-long-campaign by sections of civil society activists and political parties.

Mr. Mahendran, who was made the Governor immediately after the present government took over in January 2015, is serving the reminder of the term of his predecessor, Ajith Nivard Cabraal, which is expiring on June 30.

The Governor has told the Monetary Board of the CBSL that he would not seek re-appointment until the Parliamentary Committee on Public Enterprises (COPE) made its findings known on the issuance of treasury bonds in 2015 and 2016.

Favouritism allegations

His decision to float bonds in February 2015 through auctions or what the Bank called, “a complete market-based mechanism” instead of the earlier process of private placements had triggered a controversy.

A number of questions and allegations were raised against the move on various grounds such as impropriety, favouritism and lack of transparency.

Even though the Supreme Court had refused to entertain a petition against the issue of bonds, the matter was later raised in Parliament where Prime Minister Ranil Wickremesinghe had defended Mr. Mahendran, who, the opposition had contended, was not a citizen of Sri Lanka. Mr. Mahendran holds the citizenship of Singapore.

Another round of controversy erupted after the bonds were raised three months ago.

In the recent weeks, the Sri Lanka Freedom Party (SLFP), which is sharing power with the United National Party (UNP) at the Centre, also joined others in demanding that Mr. Mahendran be not given a fresh term of six years.

Despite repeated attempts Mr. Mahendran could not be reached for comment.

June 29 meeting

Explaining the legal position on the post of Governor, P. Nandalal Weerasinghe, the senior-most Deputy Governor among the existing set of Deputy Governors and who has been a Deputy Governor since September 2011, says there is no provision in the law for having an interim Governor if the government chooses not to make anyone Governor by June 30.“There has to be Governor, from July 1,” Dr. Weerasinghe said.

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