Nihal Fonseka re-appointed as Sri Lanka monetary board member

ECONOMYNEXT – Nihal Fonseka, a veteran banker, has been re-appointed to the Monetary Board, the governing board of Sri Lanka’s central bank.

Fonseka said he thought hard before accepting the invitation.

Fonseka has over 23 years of experience in the banking sector. He was Chief Executive Officer of the DFCC Bank and was the Deputy Chief Executive Officer of HSBC Sri Lanka for 10 years.

He has earlier served in the Monetary Board from 2016 and left after a change of administration.

Fonseka is taking the appointment at a time when the country’s banking system is facing multiple challenges after the a soft-peg with the US dollar collapsed after two years of money printing and sterilized forex sales depleted reserves.

Banks were injected short term money after interventions were made in the foreign exchange market by the central bank in part for imports (reserves for imports), effectively making them credit not-backed by real savings but central bank re-finance.

Meanwhile bank balance sheets are also facing dollar liquidity shortages due to the lack of dollar savings in the country as external credit lines dry up.

Dollar savings are blocked by conversion rules which make them into rupees diving domestic credit consumption. (Colombo/May28/2022)