Lanka Prez economic adviser to head bank

COLOMBO, June 3: Sri Lankan President Mahinda Rajapakse's chief economic adviser will take over as governor of the island's Central Bank next month after the incumbent resigned for personal reasons, a senior presidential aide said on Saturday.

Ajith Nivard Cabraal, Secretary of Sri Lanka's Ministry of Plan Implementation, oversaw Rajapakse's economic manifesto for last year's presidential election and has also been involved in efforts to jumpstart a teetering peace bid with the Tamil Tiger rebels.

''He has accepted the job,'' a top Rajapakse aide told Reuters.

''He will almost certainly have to give up his role at the plan implementation ministry to be able to run the central bank independently.'' ''I don't know if he will be able to continue as economic adviser to the President. I don't know if there is a conflict of interest there.'' Central Bank Governor Sunil Mendis said on Friday he had tendered his resignation and would leave the post at the end of June, saying he was retiring for personal reasons so he could travel and visit his children who live abroad.

Mendis has overseen Sri Lankan monetary policy for two years, and gave no hint on whether the bank's monetary policy committee would raise benchmark interest rates, as many analysts expect soon, before he leaves.

The central bank kept rates steady in May for the fifth month in a row, citing moderating inflation and strong growth in key economic sectors.

The bank's overnight repurchase rate stands at 8.75 percent while the reverse repurchase rate is at 10.25 percent -- their highest level since 2003.

REUTERS