- Monetary Board’s Dr. Ranee Jayamaha drops bombshell at COPE
- Claims herself and fellow member Sanjeeva Jayawardena were against decision
- Says other three board members approved using reserves to defend rupee
By Imesh Ranasinghe
Former Central Bank of Sri Lanka (CBSL) Governor Prof. W.D. Lakshman and former Finance Ministry and Treasury Secretary S.R. Attygalle, who were part of the CBSL’s Monetary Board during their respective tenures, had wanted to maintain a fixed exchange rate to control foreign debt figures, despite opposition from two members of the Monetary Board, claimed Monetary Board Member Dr. Ranee Jayamaha.
She revealed this when the Committee on Public Enterprises (COPE) met with CBSL and Treasury officials on Wednesday (25).
The CBSL’s Monetary Board comprises three non-executive members, as well as the CBSL Governor and the Secretary to the Ministry of Finance, as per the Monetary Law Act.
According to Dr. Jayamaha, from the time she was appointed to the Monetary Board in July 2020, the Government wanted to maintain a fixed exchange rate to control the debt ratio numbers, and to avoid the increase of the debt repayment amount in rupees.
“Myself and fellow Monetary Board Member Sanjeeva Jayawardena were against the decision of keeping the dollar rate fixed at Rs. 203, and we were of the opinion that using the CBSL’s reserves to defend the rupee was something that should not have been done,” Dr Jayamaha said.
She added that herself and Jayawardena, both non-executive members of the Monetary Board, had continuously advised the CBSL Governor against this move.
“We repeatedly informed the CBSL Governor and the Treasury Secretary to at least allow the dollar to depreciate by Rs. 10, since using the country’s reserves to defend the rupee was not something that should have been done.”
“Unfortunately, since the Monetary Board has five members, the three remaining members were in favour of maintaining the exchange rate at a fixed value, so they went ahead with the decision despite our objections,” she said.
She charged that former CBSL Governor Prof W.D, Lashman, former Treasury Secretary S.R. Artygalle, and Samantha Kumarasinghe, the other appointed non-executive member, were in favour of the decision.
The CBSL injected around $ 5.5 billion in reserves between June 2021 and March 2022 to maintain a fixed exchange rate, while the country is estimated to have lost around $ 2.4 billion in remittance inflows that should have come through formal channels between June 2021 to January 2022 due to the same.