Behind the Bailout: How Ranil Wickremesinghe gave away Sri Lanka’s Central Bank Independence to IMF

by Shenali Waduge ·

 

In 2023, as Sri Lanka was reeling from its worst economic crisis in decades, unelected President Ranil Wickremesinghe agreed to a $3 billion IMF bailout. But hidden inside the loan terms was a Trojan Horse — the demand to make the Central Bank of Sri Lanka “independent” from government and parliamentary oversight.

 

What followed was the Central Bank of Sri Lanka Act No. 16 of 2023, rushed through Parliament with little public debate or transparency. It transferred core economic powers from elected leaders to an insulated technocracy, handing control over Sri Lanka’s monetary policy to the IMF.

 

What was dismantled — and what it cost Sri Lanka

 

For decades, the Central Bank operated under the Monetary Law Act No. 58 of 1949:

  • TheFinance Minister sat on the Monetary Board.
  • The CBSL could issueprovisional advances to the government.
  • CBSL leadership waspolitically accountable.
  • Monetary and fiscal policy workedtogether to promote employment, development, and price stability.

This model allowed governments to respond to national emergencies, support social welfare, and invest in growth.

 

But the 2023 CBSL Act destroyed this model and installed IMF-style rules that prioritize creditors, not citizens:

 

IMF Rule in CBSL Act Real-World Impact on You
Strict inflation targeting Development, employment, and poverty reduction take a backseat. CBSL won’t lower interest rates to stimulate jobs or industry.
No deficit financing The government can’t print money or fund social programs during crises — hospitals, agriculture, and education suffer.
Full autonomy from Parliament/Government CBSL technocrats answer to IMF frameworks, not your elected MPs. There is no way to override their policies.

 

What would have happened without resistance?

Had the CBSL Act passed unchanged, Sri Lanka would have become:

  • Adebt colony, where foreign creditors and IMF officials dictate policy.
  • Aparalyzed democracy, where elected leaders are helpless during national emergencies.
  • Atechnocratic dictatorship, where a handful of unelected officials determine nation’s economic fate — without any accountability.

 

The Heroes who fought back — and what they saved

Thankfully, a group of patriotic petitioners filed a Fundamental Rights case at the Supreme Court:

 

The Supreme Court responded with vital changes:

  • Required CBSL to enter aformal inflation-target agreement with government.
  • Mandatedreporting to Parliament.
  • Restoredlimited constitutional and legal oversight.
  • Correctedprocedural flaws in how the bill was passed.

 

Without these petitioners, the CBSL would now be completely beyond the reach of Parliament and the People.

 

However — the CBSL is not truly accountable to Sri Lanka

Despite the Supreme Court’s corrections, the IMF-style model remains mostly intact:

  • CBSL’s inflation targets and reports aresymbolic, not binding.
  • The governmentcannot override or direct CBSL in times of crisis.
  • Foreign creditors come first— not the citizens of Sri Lanka.

Unlike:

  • India’s RBI, which works with the Finance Ministry.
  • UK, where the Treasury can override Bank of England in emergencies.
  • USA, where the Federal Reserve is answerable to Congress.

Sri Lanka now has one of the world’s most insulated central banks — thanks to a bill passed during an unelected presidency.

 

Sri Lanka’s Taxpayers have a right to demand questions from CBSL

 

Who bears the cost?

Sri Lanka’s public sector salary and pension bill stands at around LKR 1.7 trillion per year — over half of the total government expenditure.

 

Within this bloated spending:

  • The Central Bank of Sri Lanka recently awarded salary increases averaging50–77% for its staff
  • An entry-level clerk (Office Assistant) now earnsnearly LKR 200,000 per month, while a Deputy Governor may receive LKR 1.7 million in salary alone
  • CBSL also contributes29% of gross salary to pensions/provident funds, plus foreign training and low-interest loans

 

Taxpayers spend – IMF & Pro-IMF staff benefits?

 

CBSL staff are unaccountable to taxpayers. Instead they work to redirect public resources to creditors focusing on inflation control & debt repayment. Using taxpayers money CBSL acts like a quasi-private institution, using public funds while prioritizing IMF/creditor interests, not citizens.

 

Key takeaways for taxpayers:

  1. Every rupeespent on CBSL salaries, perks, and pensions now funnels into a system prioritizing foreign lenders, not local communities.
  2. Tough economic reforms, cost-of-living increases, and service cuts arenot matched by flexibility in monetary policy because of the CBSL’s new structure.
    1. The public has a right to ask: Should theCBSL continue to enjoy elite compensation when it isn’t serving national needs?
  3. Why should Sri Lankansfund a bank that isn’t accountable to them or working in their interest?

 

What Sri Lankans Must Demand:

  • A fullreview and reduction of unsustainable CBSL salary and pension structures.
  • Parliamentary oversightof CBSL spending and compensation, ensuring public funds serve the public.
  • Restoration of a Central Bank that isdemocratically accountable, transparent, and aligned with Sri Lanka’s development priorities.

 

Finding Fault is Not enough — Parliament Must Act

 

Blaming Ranil Wickremesinghe now is not the solution.

He may have betrayed the nation by agreeing to this IMF condition, but today’s Parliament holds the power to reverse this Act.

 

Why must the CBSL Act be repealed or amended?

  • It gives power to unelected officials who are not accountable to the People (this is a violation of Article 3).
  • It shackles the government’s hands during economic crises
  • It implements policies that hurt local businesses, jobs, and welfare.
  • Taxpayers need not fund an institution that serves the IMF — not the people.

 

What must be done — before it’s too late

 

The current government has the majority in Parliament. It must act now.

 

A NEW BILL that:

  • Restoresparliamentary oversight of CBSL
  • Enables thegovernment to direct monetary policy during crises
  • EndsIMF conditionalities embedded in domestic law
  • PutsSri Lanka’s development, not debt repayment, first

 

Final Warning

If the Central Bank serves foreign creditors instead of the People, democracy becomes meaningless.

 

If your elected government cannot govern the economy, who governs you? Why should a private institution dictate to a sovereign nation & its people?

Sri Lanka must choose:

  • Asovereign republic led by its people,
    or
  • Adebt colony, ruled by unelected technocrats.

 

Let’s finish what the petitioners began – Reverse the CBSL Act 2023.

Reclaim our future.

 

 

 

 

Shenali D Waduge

 

 

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