Central Bank Governor Defends Salary Increases

Central Bank Governor Dr. Nandalal Weerasinghe said that he believes the recent outcry of Central Bank employee salary increases has been intentionally designed to challenge the organization’s self-governance.

He warned that overstating the salary adjustments to question the autonomy of the regulator overseeing the financial sector might gravely harm the economy, possibly returning it to the precarious situation experienced a few years ago. “Maintaining the Central Bank’s independence in determining staff wages and salaries is crucial to prevent undue pressure from fiscal bodies. This was a problem in the past.

The matter of salary adjustments can be calmly debated in terms of morality and ethics. That’s a separate conversation. However, leveraging this issue to confront the Central Bank or endanger its independence through legislative changes poses a significant risk,” he added.

Although the Central Bank has previously reviewed salaries, Dr. Weerasinghe noted that this is the first occasion the institution has publicly disclosed such revisions.

“We are being transparent. We are proactively informing Parliament about the salary increments and the rationale behind them. We are ensuring accountability,” he stated.

Dr. Weerasinghe warned that losing the Central Bank’s autonomy could lead to another financial crisis.

“A precedent was set in 2019. Although a new bill for the Central Bank was proposed, the incoming administration decided against the need for its independence, preferring instead to enforce fiscal dominance.

The consequences of this decision became apparent over the following two years. Thanks to the Central Bank’s independence, we managed to restore stability. Nevertheless, it seems the importance of this autonomy is being overlooked, with efforts underway to undermine it,” Dr. Weerasinghe explained.