Markets are awaiting the appointment of Nivard Cabraal as the new Governor of the Central Bank, but ex-staffers and experts are questioning whether such a move is in the best spirit of the laws enunciated under the Monetary Law Act.
Experts pointed out that the Section 11 of the Monetary Law Act relating to the disqualifications for appointment as the Governor states as follows:
Disqualification for appointment as Governor, or as member of the Monetary Board.
11. (1) a person shall be disqualified for appointment as the Governor of the Central Bank
(a) he is a Member of Parliament, or a member of any Provincial Council or any local authority; or
(b) he is a public officer or judicial officer within the meaning of the Constitution of the Democratic Socialist Republic of Sri Lanka, or holds any office or position (other than an academic position) either by election or appointment, for which salary or other remuneration is payable out of public funds or the funds of any local authority; or
(c) he is a director, officer, employee or shareholder of any banking institution (other than the Central Bank).
Ex-staffer and analysts questioned whether the resignation of a person who is a member of Parliament removes the disqualification referred to under the law.
“Was the intention of the legislator and first Governor John Exter, when he drafted the Monetary Law in 1958, to exclude persons engaged in politics from being appointed as a Governor of the Central Bank?” they questioned.
The Central Bank is a prestigious institution expected to be autonomous in discharging its duties.
In that context a member of a political party, experts said, has never been appointed as a Governor of the Central Bank, although N.D.P. Panditharatne served the post long ago as an appointed member despite the fact he was a member of the UNP.
Cabraal is a Founder Member of the Sri Lanka Podujana Peramuna political party.
Sources said that Cabraal, who is the current State Minister of Money, Capital Markets and Public Enterprises Reform, is awaiting formalities of the impending appointment covering the interim period as well as a full six-year term. Reports said that he also wanted the status of CBSL Governor to be placed on par with that of a Cabinet Minister. He will replace incumbent Prof. W.D. Lakshman.
Speculation was that the Monetary Board had a special meeting yesterday and bid farewell to Prof. Lakshman.
Cabraal served as the Central Bank Governor from 1 July 2006 until his resignation on 9 January 2015. During his tenure Cabraal was credited for the overall improvement in macroeconomic fundamentals, beginning the long streak of low single digit inflation rates, lower interest rates, stable exchange rate with a consistent rate of rupee depreciation and enhancing reserves. The then Opposition however blamed him for mismanagement.
When Daily FT contacted him for his comments on the widespread speculation, Cabraal limited his response to: “Can’t deny. Can’t confirm.” However, he is reported to have told close associates that at present “CB Governor position is critical and the need of the hour” to successfully chart Sri Lanka out of the foreign reserves and debt challenge.
He does not mind forgoing the privileges of an MP, as well as temporarily sacrificing the larger political goal of wanting to become a Cabinet-level Minister.
Cabraal is a Chartered Accountant by profession, and was the first Chartered Accountant to hold the position of a Minister in Sri Lanka. He was also a past president of the Institute of Chartered Accountants of Sri Lanka and also held the positions of President of the South Asian Federation of Accountants. As an accountancy student in Colombo, Cabraal met current Prime Minister and former President Mahinda Rajapaksa, who was studying law at Sri Lanka Law College. In 2000 he gained an Eisenhower Fellowship.
Until 2005, Cabraal had a management consulting company (Cabraal Consulting Group) specialized on corporate governance (strategic planning, mediation) and turnarounds and served at various times as president or board member of various organizations and institutions of a professional or regulatory nature.
Cabraal was chief economic advisor to Mahinda Rajapaksa during the latter’s term as prime minister, contributing to his manifesto (Mahinda Chintana).In 2005, Cabraal resigned from all his private positions to work full-time for the Government. In February 2006, Cabraal was involved in talks with the Tamil Tigers in Geneva. Cabraal was also the Secretary to the Ministry of Plan Implementation during the first term of then president Mahinda Rajapaksa.