Stressing that wrong economic decisions made by a few had led the country into an economic abyss and could be considered a criminal act, Chairman of the Committee on Public Enterprises (COPE) Dr. Charitha Herath recommended appointing a Parliamentary Select Committee (PSC) to investigate the causes of the current economic crisis as well as officials who neglected their responsibilities in this regard.
Dr. Herath made this recommendation when CBSL Governor, Dr. Nandalal Weerasinghe and CBSL officials appeared before the Committee to discuss the Auditor General’s reports and economic progress in the country at the moment.
When COPE queried about the root causes of the economic crisis, the CBSL Governor said that by March / April 2020, the International Monetary Fund (IMF) had informed Sri Lanka in writing that Sri Lanka lacked Debt Sustainability. Therefore, the then Secretary to the Ministry of Finance and then CBSL Governor had been informed in writing that existing loans would have to be restructured in order to obtain credit facilities, Dr. Weerasinghe said.
Accordingly, after having relevant technical discussions under the Finance Act, the Monetary Board of CBSL provided relevant recommendations to then Minister of Finance and other senior officials,
Dr. Weerasinghe said, adding that relevant decisions are taken by the Cabinet including the Minister of Finance.
MP Dr. Harsha de Silva pointed out that the then Minister of Finance had never addressed Parliament and that Ajith Nivard Cabraal, who was speaking in Parliament on his behalf, had not informed Parliament of this fact.
He also pointed out that Sri Lanka’s debt was stable as of November 2019, according to the IMF report, and that, months after the presidential election, the IMF stated Sri Lanka’s debt was declared unsustainable.
With the intervention of the then Secretary to the President, tax revenue was increased by Rs 600 billion, Dr. de Silva said, querying as to who made this decision when the IMF clearly instructed not to tread that path.
At this juncture, MP Sarath Weerasekara responded, the said decision was taken to encourage entrepreneurs, he said.
The Committee inquired about the prevailing opinion in society about the loss of large sums of money due to the retention of the exchange rate in the recent past.
In response, Dr. Weerasinghe stated that the power to do so rests with the Monetary Board and the then member of the Monetary Board, Dr. Rani Jayamaha noted that she along with former Monetary Board member, Sanjeewa Jayawardena had strongly objected to the effort to keep the exchange rate at bay using Central Bank reserves.
It was revealed that the exchange rates were retained as per the wishes of three monetary board members and was done at the behest of the then Governor of the Central Bank, Prof. W.D. Lakshman, the then Secretary to the Treasury and appointed member, Samantha Kumarasinghe.
COPE emphasised the need to give the Central Bank the power to take decisions based on accurate technicalities without the influence of outside parties.
The CBSL Governor said that although it was difficult to obtain the required foreign exchange for the next three to four months, he would try to overcome that challenge somehow while pursuing an agreement with the IMF.
BY Methmalie Dissanayake