ECONOMYNEXT – The International Monetary Fund (IMF) urged Sri Lanka’s Central Bank’s transparency to justify its salary hike following the recent controversy over a steep wage hike without parliamentary approval, while the rest of the public sector is under a salary restraint.
The Central Bank under increased the salaries of its employees between around 70 percent or more a triennial pay revision.
The move angered the public sector employees and legislators as the government had issued fiscal authority directive to tighten the belts.
The move without any parliament approval was seen as a wrong procedure after a new Central Bank Act that had given more autonomy for the Apex bank to handle the monetary policy without any political interventions.
“We don’t have much to say with respect to the salary hike,” Peter Breuer, the IMF Mission Chief to Sri Lanka told reporters at a media briefing after the global lender’s conclusion of the second review of $3 billion, 4-year loan.
“What’s important is that there is a high degree of transparency from the part of the Central Bank to explain how it is benchmarking its decisions and the key is preserve the central bank’s independence.”
According to disclosures made in the parliament the salary of an Office Assistant Grade I increased by 29.53 percent to 188,827.33 and a Deputy Governor by 76 percent to 1,728,419 rupees a month.
According to the constitution, parliament has the full powers on the public finance.
Some legislators raised the issue in the parliament assuming that the Central Bank used the new Act to bypass the parliament approval.
Central Bank officials explained that the salary increase had nothing to do with the new Act, but has been done under decades old practice through a collective agreement.
The top officials of the Central Bank appeared before the Committee on Public Finance (COPF) later.
The new Central Bank Act, which was an IMF demand for the 3 billion dollar loan, was passed in parliament later last year.
“The Central Bank’s Accountability to the parliament established. Governor of the central bank informed COPF today that they accepted all recommendations from COPF report on salary revisions,” Harsha de Silva said in his X (formerly Twitter) feed on Thursday (21).
“President Ranil Wickremesinghe is to appoint a committee ASAP to review salaries, until which salary increases will be deferred from next month,” he said.
In its recommendations, the COPF has said the Finance Minister should, with immediate effect, appoint an independent remuneration committee with the concurrence of the Central Bank Governor to review the salary increase under discussion.
The COPF further noted that the members of this independent remuneration committee need to be co-opted from the Central Bank as well as from outside; both within and outside the public sector as necessary.
The Central Bank has agreed to the COPF conditions, de Silva said. (Colombo/March 22/2024)