Lack of independence at Central Bank led to Sri Lanka's bankruptcy

The governor of the Central Bank of Sri Lanka Nandalal Weerasinghe has cited the lack of independence of the apex bank in determining the monetary policy as a reason for the country's unprecedented economic crisis.

The Sri Lankan government in May last year declared a debt default on over USD 51 billion in foreign loans -- a first in the country's history.

Weerasinghe made the statement on Thursday while talking about a proposed bill aimed to provide autonomy to the Central Bank without any undue influence from the fiscal authorities or the government.

"In 2020, 2021 and 2022, the policy interest and exchange rates were fixed without the Central Bank," Weerasinghe said.

The exchange rate was fixed at Rs 203 leading to the total loss of our reserves and bankruptcy, he said, recalling the situation prevailing at the time of his takeover last year from his predecessor Ajith Cabraal.

He said it was important to let the Central Bank act independently to determine the policy interest ra