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House to debate new Foreign Exchange Bill on Tuesday
View(s):By Chandani Kirinde
The new Foreign Exchange (FE) Bill which will relax Exchange Control by liberalising inward and outward remittances of both local and foreign currencies, will be taken up for debate in Parliament on Tuesday following The Supreme Court’s (SC) determination that the Bill is consistent with the Constitution.
The new Bill will replace the old FE Control Act and remove criminal culpability of those found guilty of violating FE laws, and replace punishment for offenders with fines of up to Rs 1 million.
The three-member SC Bench, in its determination, supported the decriminalisation of FE related offences, stating, “that the existing FE Control Act was enacted in 1953, at a time when exchange control was the norm, and it contains criminal offences which are rather harsh” and that, “most countries in the world have liberalised exchange control laws, and also moved away from criminal offences to civil penalties.”
The SC Bench comprising Acting Chief Justice Eva Wanasundera P.C. and Justices Buvaneka Aluwihare P.C. and Prasanna S. Jayawardena P.C. also said, “the existing law has not been successful in preventing the outflow of FE through legal and non-legal channels and therefore, a new law is required to provide incentive for Sri Lankans having money outside the country, to remit that money to Sri Lanka, without having to face criminal penalties. The Bill contains adequate provisions for Govt. intervention if any outflows of FE become a threat to the national economy.”
Four petitions were filed in the SC challenging the constitutionality of the Bill, but the Court determined that except for a few minor corrections, the Bill can be passed by Parliament with a simple majority of MPs present at voting time.
“The Cabinet has deliberated on the matter of FE which affects the economy of this country and found that a proper legal framework is needed for the management and regulation of FE, and to encourage Sri Lanka’s citizens to remit to the country, FE they have in their possession, outside Sri Lanka,” the Court said.
The Court also observed that the “regulation of FE is within the scope and ambit of Parliament’s control over public finance, and this Bill to be enacted is a furtherance of the Legislature’s control over a source of public finance, namely FE.” Clause 2 of the Bill, which was challenged by the Petitioners on the ground that, it gave the Minister assigned to the subject of the Central Bank (CB), the authority to issue directions to the CB and the Monetary Board, which would result in those agencies losing their independence, and subject the Board to the arbitrary whims of the Minister.
However, the Court ruled that, the “CB is not an autonomous institution and is an agent of the Govt., which would be accountable to the Executive and the Parliament “and that, “the Minister cannot give directions at his whims, as alleged, but only for the implementation of the provisions of this Act.”
The CB now comes under Prime Minister Ranil Wickremesinghe who is also the Minister of National Polices and Economic Affairs.