Immunity for CB Governor, officials in debt management bill
Proposed new regulations governing the management of Sri Lanka’s massive debt has a significant provision giving immunity to the Central Bank (CB), members of the Monetary Board and all officers of the banking regulator against prosecution if they act in good faith, according to the gazette that has been issued.
The new regulations under the Active Liability Management bill is aimed at better liability (debt) management and due to be presented to parliament within the next three months.
Section 9 which deals with “defence in criminal or civil proceeding” states that members of the Monetary Board, officials of CB and those working for the line Minister of Ministry “cannot be held liable, either for criminal matters or civil matters for performing in good faith the duties and/or exercising the powers given to them by this Act or any regulation, Order, decision or directive issued and made”. The Sunday Times last week reported plans for this new law.
This new bill authorises the raising of loans in or outside Sri Lanka for the purpose of active liability management to improve public debt management in Sri Lanka and to make provisions for matters connected or incidental to it.
Any loan raised for and on behalf of the Government for the purposes of refinancing and pre-financing of public debts shall be exempted from the application of the provisions of section 2 (1) (b) of the Appropriation Act, No. 30 of 2017 and also of any annual Appropriation Act which is enacted after the date of commencement of the Appropriation Act, No 30 of 2017.
Discussing the proposed new law, Deputy Minister of National Policies and Economic Affairs, Dr. Harsha de Silva told the Business Times that this bill has been endorsed by international independent rating agencies as well as the International Monetary Fund (IMF).
Sri Lanka has commenced a debt sustainability process under the supervision of the IMF, he disclosed.
Ministries of Finance, National Policies and Economic Affairs, and the CB all worked together to introduce this bill which is aimed at managing public debt to ensure the financing needs and payment obligations of the Government are met at the lowest possible cost over the medium to long term consistent with a prudent degree of risk, he disclosed.
Sri Lanka’s non-commercial debt has increased alarmingly to 55 per cent in 2017 from seven per cent in 2006; he said adding that this massive debt problem is inherited from the previous Rajapaksa regime.
“We have been collecting dollars from the market for the past 6-7 months while building buffer stocks to service additional debts,” he said.
He stressed the importance of maintaining a liability management fund with input coming in from profits in managing strategic entities and money raised from the divestiture of non-strategic public enterprises.
The money collected from the sale of Grand Hyatt Hotel and Hambantota port lease will also go to this fund.
Diversification of external borrowings in financial markets in 2020 is also on the cards he added.
Asked to comment on the immunity clause, he said most of the laws have this as a standard clause and there is nothing to be alarmed about.
Analysts however say the immunity clause in the Active Liability Management bill appears to have a wider meaning than what is contained in other bills.
For example the Foreign Exchange Act 12 of 2017 in the section under “Indemnity for acts done in good faith” says: “No person shall be liable in any suit or other legal proceedings for any act done, or purporting to be done, in good faith in pursuance of the powers conferred by or under this Act, or for the purpose of carrying out the provisions of this Act.”
The connected clause in the Monetary Law Act under Section 47 on “Protection for acts done in good faith” says: “No member of the Monetary Board or officer or servant of the Central Bank shall be liable for any damage or loss suffered by the bank unless such damage or loss was caused by his misconduct or willful default.”
The Development (Special Provisions) Bill says no action or prosecution shall be instituted against the “Agency, Board or other institution for any act which is done in good faith, or purported to be done, by such Agency Board or other institution under this Act”. The same applies to its officials.