Apr 16, 2013 (LBO) – Sri Lanka’s monetary and fiscal policy is in harmony with both authorities aiming for stability low inflation, and the presence of a Treasury official in the central bank was a not a threat to its independence, officials said. The secretary to the finance ministry is an ex-officio member of the Monetary Board, he rate setting governing board of Sri Lanka’s central bank.
In the face of high inflation and currency depreciation generated by the Central Bank by printing money to finance deficit in the past, critics have called for the Treasury to be removed from the board to allow it to generate low inflation without pressure to monetize.
Treasury Secretary P B Jayasundera said his being the monetary board was not an obstacle to the independence of the institution and co-ordination was needed between the finance ministry and central bank for economic management.
“It is because of this need that when John Exter, an American designed the central bank, gave a permanent position was given to the Treasury in the monetary board,” Jayasundera told a forum in Colombo held to release the annual report of the central bank for 2012.
“It is from this co-ordination that the government and monetary po