ISSN: 1391 - 0531
Sunday March 9, 2008
Vol. 42 - No 41
Financial Times  

CB has economic pundits, not political pundits

Central Bank Governor, Nivard Cabraal said recently that any bank can borrow and has a right to do so.“When ICICI, HSBC and Standard Chartered Bank borrowed no one asked questions. We have opened the economy. When you do so, everyone should be in a position to borrow money,” he said responding to questions against borrowings by state banks.
He stressed that the government cannot be diabolic about who should or should not borrow money. “Only when the state banks get funding lines, everyone is in a furore. It is important to understand that state banks can borrow from outside and lend. When John Keells Holdings (JKH) borrowed from International Finance Corporation, nobody raised questions,” he pointed out.

He said the Central Bank has relaxed exchange control. “If the state banks can borrow at cheaper rate, they should. Bank of Ceylon, National Savings Bank, JKH, LOLC are all borrowing because of relaxed exchange control,” he said.Cabraal noted that due to this move many companies have invested in the Maldives and this has given them the impetus to venture out.

He said that people should look at interest gain. “We have an open market economy. We allow capital to move freely. This is a good thing, because our endeavour to make Sri Lanka an economic hub has begun to realise,” he added. He said those who borrow will take the exchange loss and not the government.

When asked about criticisms the regulator is bombarded with, he said that he is ‘tired’ of responding to unfounded allegations.“We have top-notch people at the Central Bank. We have experts in respective fields. We have economic analysts not ‘political analysts’.


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