Sri Lanka’s Central Bank (CB) Governor Arjuna Mahendran will chair a crucial meeting of the bank’s Monetary Board on (Monday) that is likely to seriously consider current interest rates and the value of the rupee against international currencies.
“While interest rates are unlikely to be changed, there is clear evidence that the value of the rupee has been artificially kept high when the US dollar has seen movements vis-a-vis other currencies,” an experienced banker said, adding, “there is pressure on the rupee”.
The board, CB sources said, will meet with Mahendran in the chair and other members being Ms. Manohari Ramanathan and new Treasury Secretary R.H. S. Samaratunga. Two other members Neil Umagiliya and Nimal Welgama have resigned, and replacements are yet to be made. Since the quorum required per meeting is a minimum of three, the sources said that Mahendran can call a meeting, which is a scheduled one to announce the monetary policy review for the month. The new Governor, an experienced local and international banker who nevertheless found a few objections to his appointment, was finally confirmed in his position on Friday.
While a clean-up of the Central Bank is underway amidst allegations of corruption, which has been alluded to by Prime Minister Ranil Wickremesinghe, some of the other matters under consideration is the controversial oil hedging deal and the Central Bank’s role in it – exposed by the Business Times - and whether the government has enough revenue to meet all its promised commitments which would be announced in the interim budget this week. Inflows to foreign reserves have slowed down with winter tourist arrivals being weak.
Separately an investigation has begun at Sri Lanka Tourism over political spending. Another issue that needs to be looked as is the accuracy of figures and statistics, industry sources. The earlier administration said Sri Lanka will see 1.5 million arrivals in 2014 – ENDS -