News ≫ Sri Lanka Names Economist Coomaraswamy as Central Bank Chief

Sri Lanka Names Economist Coomaraswamy as Central Bank Chief

Jul 2, 2016
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Sri Lanka named economist Indrajit Coomaraswamy central bank governor, days after Arjuna Mahendran’s term ended on June 30 following allegations of nepotism.

Coomaraswamy, a former central banker and economic affairs director at the Commonwealth Secretariat, was picked after “consulting all parties relevant”, President Maithripala Sirisena said on Twitter. The new governor will probably be in office for a year, following which the government will “reconsider,” junior Finance Minister Lakshman Yapa Abeywardena said on June 29.

The incoming chief will have to navigate the central bank through a $1.5 billion program from the International Monetary Fund. While some conditions of the loan have been termed “ambitious” by Moody’s, investors have cheered the development, boosting the rupee about 2.5 percent from its record low hit in March.

Mahendran, a former HSBC Holdings Plc wealth manager, had said he wouldn’t seek an extension until cleared of allegations of nepotism. The government’s failure to name his successor before the end of June left the central bank governor-less for the first time in its 66-year history.

Mahendran has faced allegations that his son-in-law — head of a local brokerage — benefited unduly from sovereign bond sales. He was also accused of lavish personal spending on his official expense account. A government panel probing the debt auctions last year found no involvement by Mahendran and the central bank rejected allegations that he misused public funds.

However some analysts — such as Sasha Riser-Kositsky at Eurasia Group — say Mahendran was caught between three-way tensions within factions of Sirisena’s party and its coalition partner.

The Committee on Public Enterprises, which monitors financial discipline in state organizations, opened a fresh investigation in 2016 and anti-corruption activists held street protests seeking Mahendran’s ouster.

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