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New Govt. wanted CBSL to raise Rs. 172 billion in March 2015, bond commission told
View(s):By Manopriya Gunasekara and Ranjan Katugampola Â
The Central Bank of Sri Lanka (CBSL) had a mechanism to provide funds required by the Government, the Bank’s former Director General (Operations) M.S.D. Ranasiri told the Presidential Commission of Inquiry (COI) probing the issue of treasury bonds from February 1, 2015 to March 31, 2016.
The Commission comprises Supreme Court Justices K.T. Chitrasiri, Prasanna Jayawardena and retired Deputy Auditor General V. Kandasamy.
Mr. Ranasiri said the CBSL, for this purpose, made use of the reserves and obtained overdrafts from state banks – the Bank of Ceylon and the People’s Bank.
He said that with the change of government in 2015, the Government required money to meet the expenses of the Ministries of Health, Education, Water Resources and Highways. Referring to a letter marked as C12, Mr. Ranasiri said it contained a proposal suggesting that Rs. 172 billion should be raised in March 2015 by issuing treasury bonds and that for the first week of March, Rs. 13.5 billion should be raised.
He said it was proposed to raise the funds on a weekly basis to raise the required funds.
Mr. Ranasiri explained that the money received was made use of to pay the Government’s debts while the other expenses were met by funds from other revenue.
In response to a question from the Commission, the former CBSL Director General said it was his duty to inform the Public Debt Department of the funds required by the state.
He said he took part in the meetings held by the Public Debt Department of the Central Bank in 2014, but after he was told not to attend the meetings, he stopped attending them. However, he was invited to attend the December 31, 2014 meeting, which he could not attend. Mr. Ranasiri said he also could not attend the meeting of February 27, 2015 because he had to attend a meeting on the Government’s 100-day programme at the Prime Minister’s office.
In response to a question as to whether the Finance Minister discussed the state financial requirements on a weekly basis, Mr. Ranasiri said no such discussions took place. But if there was a special necessity, discussions were held with the minister.
He said there were special occasions when the state requested for funds for various payments and they included the payment of salary advances for the public sector employees in April.
On Wednesday, Senior Deputy Governor Nandalal Weerasinghe continuing his evidence said former Governor Arjun Mahendran did not have any discussions about the request to provide Rs. 75 billion within a month to be given to the Road Development Authority (RDA) to make payments for various projects.
Dr. Weerasinghe was questioned about a letter from a Parliamentary Committee regarding currency printing.
He produced a letter sent by the Central Bank to the Parliamentary Committee on printing of currency.
(At this point, the commissioners asked the members of the public and journalists to leave the hall as Dr. Weerasinghe was to be questioned on the letter and other confidential correspondence).
Dr. Weerasinghe on Tuesday in his evidence said that, at a meeting presided over by Finance Minister Ravi Karunanayake, the minister had asked for about Rs 75. billion for Road Development Authority (RDA) projects.
At this point Attorney Chanaka de Silva (Counsel for Mr. Mahendran) produced a letter reportedly sent by Mr. Karunanayake to Dr. Weerasinghe, but Additional Solicitor General Dappula de Livera said the letter was questionable as it did not have a date and there was no reference to the Governor.
Mr. de Silva said the Minister should be summoned before the Commission.
Dr. Weerasinghe in his evidence on Monday said that, after the change of government, a meeting of the Monetary Board was held on February 26, 2015, and thereafter in the Government’s mini-budget the salaries of the public sector employees were raised.