Central Bank’s officials are exercising their duties in a professional manner and so far there was no question about their integrity, its Governor Dr. Indrajit Coomaraswamy told a media conference in Colombo this week responding to  a barrage of questions raised by journalists on accusations levelled against certain top officials whose names appeared in the [...]

The Sunday Times Sri Lanka

Selling ‘non strategic’ state assets key to boosting foreign reserves, says Central Bank Governor

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Central Bank’s officials are exercising their duties in a professional manner and so far there was no question about their integrity, its Governor Dr. Indrajit Coomaraswamy told a media conference in Colombo this week responding to  a barrage of questions raised by journalists on accusations levelled against certain top officials whose names appeared in the COPE report on the controversial bond issue.

Answering a question raised by a journalist as to why the Central Bank is allowing a certain top official who was allegedly involved in the scam to head an important department and brief media on monetary situation and clarify complex issues at media conferences chaired by the Governor, Dr. Coomaraswamy noted that two internal investigations on the bond issue are continuing and no official has been found guilty of any wrongdoing so far.

He said that during his short tenure of eight months as the bank Governor, he has not found any official who is involved in unprofessional practices. However necessary disciplinary action will be taken against anyone in the bank who is found guilty for misdeeds in the bond issue.

Each section of the relevant departments was manned by professionals with dedication and they are carrying out their duties in a professional manner, he disclosed.

He said the Monetary Board has taken action to curtail certain activities of Perpetual Treasuries Ltd who is allegedly connected to the bond scam as the bank’s onsite examination report has identified some violations of this primary dealer.

He revealed that he has written to the IGP to instigate a CID investigation into the bond issue and the investigation is now in progress.

Declining to comment on a question raised by a journalist in relation to the freezing of the bank account of Perpetual Treasuries, he noted that the primary dealer’s licence has not been cancelled as yet as charges against the primary dealer should be proved beyond reasonable doubt.

Referring to the actions that would be taken to manage debt servicing of US$ 2.6 billion this year, Dr. Coomaraswamy noted that the aim of the Government is to build foreign reserves to $7.5 billion by end 2017, raise $1 billion from a syndicated loan and a sovereign bond of $1.5 billion during the next few months.

A proposal on the sovereign bond will be presented to Cabinet soon, he said, adding that the government would be able to receive earnings of over $2 billion from the sale of non-strategic state assets such as the Hambantota Port, Mattala Airport and divestment of hotels and commercial property.

Strongly supporting the government’s plan to sell non-strategic state assets, he said it is ‘tremendously beneficial’ to assist in liability management.

Dr. Coomaraswamy revealed that the bank is closely monitoring the macroeconomic situation and high private sector credit as the two state banks, the Bank of Ceylon and the People’s Bank are lending at over 30 per cent while the other banks are below 20 per cent.

He asserted that Central Bank was closely monitoring the situation as the two state banks have given credit heavily to the construction sector and related fields exerting an impact on the tightening of the monetary policy.

State banks have responded less to the tightening of monetary policy, he said, adding that he will hold discussions with heads of the two banks and see how this could be tackled.

The bank has targeted private sector credit to decline to 20 per cent by the end of 2016 but it has gone up to 21.9 per cent and this was  a matter of concern, he added.

The Monetary Board has decided to keep policy rates unchanged despite increasing inflation in January.

Dr. Coomaraswamy attributed the rise in inflation to the 15 per cent VAT hike affecting the education sector as parents had to pay school and other fees at the beginning of the year as well as the impact from severe drought conditions.

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