Govt. to institutionalise state policy: Indrajit Coomaraswamy
View(s):Spelling out government plans to revive the debt-ridden economy, Central Bank Governor Dr. Indrajit Coomaraswamy insisted that institutionalising state policy was imperative to ensure stability in future planning by any administration that runs the country.
He pointed out that the government is putting in place macroeconomic policy making and institutionalising it to ensure no deviation from targets is carried out by the state.
The Governor was addressing the special dinner hosted to honour selected accounting academics and practitioners by the Institute of Certified Management Accountants (Australia) by inducting them into its Global Accounting Hall of Fame and the Global Management Accounting Hall of Fame at the JAIC Hilton in Colombo on Thursday.
Dr. Coomaraswamy said that in institutionalising fiscal reforms the idea would be to specify the reasons for breaching the deficit which is achieved by setting up conditions under which the deficit could be breached.
Any deviation from the targets should be provided with a path back to the targets set out, it was noted.
In terms of monetary policy he noted that the government was moving towards a “flexible inflation targeting regime” that would be functioning under a legal and accountability framework.
Moreover, he noted that it could even compel the Central Bank Governor to resign should they not meet the inflation target as it would be embedded in the policy framework.
A flexible exchange rate would give exporters a competitive rate to work on and the Governor noted that the Central Bank would intervene to prevent volatility.
He also spoke about the Liability Management Act that is set to help the government to raise money to help in the external debt management apart from the limited borrowing requirements spelt out in the Appropriation Act.
The governor noted that in the past the regimes in place were able to have very repeated policies of “stop go” due to the generous concessional aid “but not anymore.” “If we don’t understand that we are in a new a paradigm then we will be in trouble,” he pointed out.
In addition, it was pointed out that the tradeable goods sector needs to be increased to manage the deficit without going out and borrowing on a commercial basis that would be “clearly counterproductive.”
He also noted that the money coming into the country from the Hambantota port lease in the next few months would be mobilised for Liability Management.
The Hambantota port deal also should be seen as one of the chances the state has 70 years after independence to transform the whole region and it also “gives a chance to do for people we haven’t done much for.”
The Governor also outlined some of the development plans like Kandy by the Japanese assistance, the economic zones in Kuliyapitiya, Trincomalee’s master plan with Singapore, India and Japan chalking out the details, the Palaly airport and Kankesanthurai port projects.
Sri Lanka also has a significant position in that it has preferential access in time to come following the signing of trade agreements with China and India added to the existing US and Europe markets which is clearly an attractive destination for investors.
Australian High Commissioner Bryce Hutchesson addressing the gathering said that the two economies of Sri Lanka and Australia would be signing a new investment framework to strengthen their economic ties.
He noted that the country has the ability to attract foreign investments and was assured of rapid economic progress under the present government.
The ambassador also called on accountants present to lend their support to the government in advocating reforms as the state alone could not do everything by themselves.
The Institute of CMA presented awards to four inaugural inductees from Sri Lanka for reaching a position of eminence in which the nature of their con_tribution shave been judged by the peers in the region to be an outstanding lifetime of achievement.
Two Sri Lankans were inducted into the Accounting Hall of Fame – former Senior Partner and Country Head of KPMG Sri Lanka Rajan Asirwatham and former Senior Partner of Ernst and Young from 1970-2001 James Mather.
Prof. M.T.A. Furkhan who in 1965 established the basics of management accountancy in Sri Lanka by introducing the Institute of Cost and Works Accountants (now CIMA) to Sri Lanka, and Prof. M.W. Wickramarachchi, founder of the Department of Commerce at the Kelaniya University and Department of Accountancy and Financial Management of the Sri Jayewardenepura University were inducted into the Management Accounting Hall of Fame.
Other special guests who addressed the gathering were ICMA Australia CEO and Former Chair of Business Accounting, Monash University Prof. Janek Ratnatunga and the CMA Australia Global President and Professor of Accounting at RMIT University Prof. Brendan O’Connell.
Over 150 participants from the corporate sector and academia from both Sri Lanka and Australia and members of ICMA Australia were also present at the awarding ceremony.