ECONOMYNEXT – Sri Lanka Parliament’s Committee on Public Finance has recommended the suspension of steep salary hike its staff was paid under on the claim of central bank independence, pending examination by an independent committee.
The committee should be appointed by President Ranil Wickremesinghe with the concurrence of Central Bank Governor Nandalal Weerasinghe with independent members, COPF Chair Harsha de Silva told parliament.
The committee can have members made up of the central bank, independent persons, government representatives, he said.
The committee should come up with a transparent system for deciding salaries in the future, de Silva said.
The COPF recommends that until a mutually acceptable salary increment is agreed, the Central Bank should suspend the current hike, de Silva said.
The salary scales of professional and non-professional grades should be de-linked, he said.
An office assistant’s salary was hiked to 186,000 rupees, it was revealed in parliament.
De Silva said the parliament’s control of public finances extended to central bank profits as well and it was not outside.
Other than for monetary policy operations, any other activities were not covered by central bank independence, he said.
State Minister for Finance Shehan Semasinghe said the report will be examined an answer be given.
Legislators expressed shock at salary hikes of up to 70 percent of more given to central bank staff, following the latest currency depreciation engineered by the agency, while the rest of the population was suffering.
There have been also queries about its pension funds.
Before central banks run by macro-economists started creating high levels of inflation with steep monetary debasement from the 1970s in particular, salaries went up on pre-determined scales.
But with aggressive macro-economic policy triggering inflation, strikes, ad hoc salary increments have become the norm and social unrest became common place around the world especially after the 1960s.
In Sri Lanka, widespread industrial strikes stopped after Governor A S Jayewardene became Central Bank Governor.
After Governor Nandala Weerasinghe took over in 2022, the central bank has probably halted hyperinflation, and from 2023, the currency has been appreciated. (Colombo/Mar20/2024)