That ‘strange logic’ of the Central Bank and other absurdities

An exceedingly strange ‘logic’ underlines Governor of the Central Bank Nandalal Weerasinghe’s claim that bringing legislative controls to prevent the Central Bank granting gargantuan salary hikes to its employees from the highest level to the lowest office assistant, will impact on the ‘independence’ of the Bank.

Morality or the law?

This will, in turn affect the economy and return Sri Lanka to a ‘troubled state’ he had said. The thrust of his argument is to the effect that, the brouhaha over the salary hikes were ‘exaggerated,’ that the morality (or otherwise, let me swiftly add) of the Bank’s actions can be ‘discussed’ but that, bringing a law subjecting the national banking regulator to ‘controls’ in that regard is a ‘major risk.’

In addition, much like the conscience stricken albeit irrepressible thief who confessed to his crimes and then later tried to plead his ‘openness’ in admitting his thievery as a defence in court, the Governor offers an explanation that salary hikes had been granted earlier as well. The difference this time around, he says, was that the Bank had gone public regarding the same.

It appears that he is under the assumption that the Bank ought to be congratulated for ‘going public.’ But we are not any more in an era where such details can be kept hidden, much like an official secret of the colonial days of old. That justification of ‘going public’ is not a fig leaf that suffices to cover the absurdity of proposing these hikes.

Preaching to others?

This is at a time when the Bank itself has been in the forefront of preaching to the public that the people must tighten their belts and put up with being taxed within an inch of their existence if Sri Lanka is to emerge at some distant point out of its financial crisis. Put bluntly, if the Governor and his officials wished to safeguard the ‘autonomy’ of the Bank, hot on the heels of legislative reform supposed to ensure its ‘independence’, the Bank should have proceeded slowly and cautiously.

The last thing that the Bank should have done was to have bestowed such unconscionable largesse on itself. The salary hikes in question, amounting to some 70% increase across the board, will reportedly cost an additional monthly expenditure of Rs 232 million. Mind you, this is apart from a plethora of other loans available to the Bank’s employees including housing and other perks and privileges.

Morality aside, there are concerns raised regarding the legality of the collective agreement between the Bank and trade unions on which the hikes have been justified. Amusingly the fracas saw the Government and Opposition benches uniting (virtually) as one to oppose the move. What has seemingly roused collective parliamentary fury is that the Bank’s office assistant’s monthly salary, once the hikes go through, may trump a parliamentarian’s monthly pay.

Public ire directed at public officials also

The salary hikes have been referred to the Committee on Public Finance. Much sound and thunder was heard over the floor of the House with warnings being made that, in the next ‘aragalaya’ (protest), public ire will be directed not only against politicians but public officials as well. This may be political hot air but there is a core of ugly truth contained in that aside.

From villages to urban city centres, the Sri Lankan populace is on the march against the ‘establishment of the privileged.’ Forced to witness their children unable to go to school due to the sheer unaffordability of educational material, subjected to untold miseries in the wake of the collapse of the public health system, the public are in a savage mood.

Corruption continues to be rife even as Sri Lanka struggles in the throes of the worst even financial crisis since independence. A former Minister of Health and his officials now in the grasp of the law in respect of gross corruption in health procurement processes. Public savagery is directed against the political elite certainly but does not stop there.

The Central Bank's responsibility

Increasingly, public anger is directed also at corrupt and venal public servants and fat cat corporates profiting off public misery. Memories of the Central Bank bond scam are still fresh in public minds. Accountability for that scandal and for many other like scandals is yet to be ensured.

Let it be said clearly that the Central Bank cannot absolve itself from responsibility for these ‘troubles’ that the esteemed Governor was referring to. That is essentially Sri Lanka’s bankruptcy in 2022 and the country’s plunge into the ‘heart of darkness,’ to borrow from Joseph Conrad’s searing critique of Western colonialism.

Put bluntly, the Central Bank, the Monetary Board and its officials cannot proclaim piously that the collapse of the economy was purely due to the ‘interference’ of the political authority at the time, even conceding the fact that some senior officials had repeatedly warned of the catastrophic consequences of Rajapaksa rule at the time.

These are hard truths that must be kept in mind as the Bank attempts to justify conferring such huge largesse upon its employees as Sri Lanka continues to suffer.