Sri Lanka central bank governor submits resignation amid crisis

Image credit: bloomberg.com

As the country faces its worst economic crisis in decades, the governor of Sri Lanka’s central bank has announced his retirement.

After all of the country’s cabinet ministers resigned, Ajith Nivard Cabraal made his announcement.

Angry protestors have also demanded the resignation of the country’s prime minister and president.

The government has been unable to pay for crucial imports like petroleum due to a chronic scarcity of foreign currency.

The island nation of 22 million people is experiencing its worst economic crisis since gaining independence from the United Kingdom in 1948.

On Tuesday, the central bank was expected to issue an interest rate decision. As the bank strives to stabilise the Sri Lankan currency, Asia Securities’ Lakshini Fernando anticipates the bank raising its main interest rate by at least two percentage points.

Since the currency was devalued last month, it has lost more than 30% of its value versus the US dollar.

While Mr Cabraal’s retirement is expected to be well received by the market, “the key will be who takes over at this point,” Ms Fernando added.

Demonstrators have taken to the streets of Colombo, the capital, as homes and businesses have been without power for up to 13 hours at a time.

Sri Lankans are also grappling with shortages and rising prices as a result of the country’s sharp devaluation of their currency last month in preparation for bailout talks with the International Monetary Fund (IMF).

It comes at a time when 26 Sri Lankan ministers have resigned, but neither Prime Minister Mahinda Rajapaksa nor his brother, President Gotabaya Rajapaksa, have.

Mr Cabraal was appointed as the central bank’s 16th governor in September.

For over a decade, from July 2006 to January 2015, he served as the bank’s 12th governor.

According to the bank, Mr Cabraal also helped to more than triple the size of the Sri Lankan economy during his first term in office.

Sri Lanka was able to preserve the good and stable macro-economic fundamentals, with inflation kept low and financial system stability attained in a time of acute global uncertainties and volatility with him in charge, the bank said.

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