Central Bank distances itself from LG polls

By Sanath Nanayakkare

Governor of the Central Bank Dr. Nandalal Weerasinghe said yesterday that the CBSL was not in any way connected to the matter of holding local government elections.

Dr. Weerasinghe said so responding to a question from journalists as to how the Central Bank viewed the possibility of holding the local government elections costing Rs. 10 billion while the country was facing a huge cash crunch.

“Allocation of funds for the local government election is a matter for the Finance Ministry, the Treasury and Parliament. It has nothing to do with the Central Bank. So, I can’t comment on it,” Dr. Weerasinghe said.

When asked what would be the impact on the economy in the event an election was held, he said,” I can’t predict the impact in the event an election is held. I can say that whether an election is held or not, the country will have to go ahead with the painful measures it is taking to get out of the current economic crisis. Sri Lanka is in a situation where talks on financial assurances, among the Paris Club, China and IMF are at a mature stage. The process has come thus far and it should continue until the objective is reached.”

When a journalist said that high taxes levied on professionals were going to land their bank accounts in the red, Dr. Weerasinghe said: “Taxes are determined by the Ministry of Finance and the Treasury. The Central Bank’s functions are to conduct the monetary policy, exchange rate policy, managing official international reserves, oversight of the financial system and price stability. Of course, there is coordination and consultation between monetary policy-making and the fiscal policymaking, but taxes are determined by the Ministry of Finance. However, if taxes affect to the extent as you say, then the Central Bank could see how such debt can be restructured to make repayments possible in an orderly manner.”

Dr. Weerasinghe made these comments following the official announcement of the Bank’s monthly monetary policy rates.