Provisions in the 2008 Appropriation Bill, drawn up before the global financial turmoil, might have to be looked at again, according to Central Bank (CB) Governor Nivard Cabraal.
During a media briefing on the global financial crisis on Friday, he said the CB will advise the Government on the Appropriation Bill over the coming week.Another stumbling block the Government could face is the petition filed by public interest activist Nihal Sri Ameresekere and former politician Themiya Hurulle challenging the Bill in the Supreme Court. When the hearing was taken up before Chief Justice Sarath N. Silva, and Justices N.G. Amaratunga and P.A. Ratnayake, Mr Ameresekere made submissions on his own behalf while Mr Hurulle and the State were represented by lawyers and the Attorney General’s office, respectively.
The main point in the challenge is that appropriating public funds to a company, private or otherwise, and thereby putting the control of public funds outside the control of Parliament, violates the Constitution. After Friday’s submissions, the court said it would convey its decision to the President and the Speaker.
At the briefing, Mr. Cabraal said it was too early to determine how the crisis will affect Sri Lanka's export industry, but added a certain slowdown is expected. However, the industry will have to see how the recession is affecting the West. He said a downturn in apparel imports to the West may not be as sharp as many expect as countries such as the US and EU nations may cut back on other imports. Mr. Cabraal said that even if there is a decline, the US economy was still huge.
When asked if Sri Lankan garment exports will remain competitive with countries such as Bangladesh which is exporting garments at a lower cost, Mr. Cabraal said the apparel trade in Sri Lanka is more sophisticated and has found a niche market. He added that there have been no shocks to remittances and normal increases have continued.
Mr. Cabraal said the CB anticipated the global financial problems through close monitoring of the foreign markets and the CB's investments in companies such as Lehman Brothers which collapsed last month. The total investment in foreign banks ranged from between US$75 million to US$90 million.
Deputy Governor W.A. Wijewardena said the CB investment in Lehman Brothers was withdrawn two days before it crashed, a development that was exclusively reported by The Sunday Times earlier.