Five forensic audit reports on bond scams ready by next month
Five out of six forensic audits into alleged Treasury bond scams and transaction of Rs. 2.2 trillion Employees’ Provident Fund (EPF) are nearing completion and those audit reports will be ready by next month, Central Bank (CB) Governor Dr. Indrajit Coomaraswamy said.
File pic of the Central Bank Governor.
He told a media conference on Friday that the forensic audit reports on the Treasury bond and EPF transactions since 1998 will be submitted to the Attorney General and necessary legal action will be taken there after.
BDO India and KPMG are conducting the forensic audits and five of those audits began in April this year.
Most of those audits are to be completed in two to three months and the longest audit will take at least six months for its completion, Dr Coomaraswamy previously announced.
The Cabinet Tender Committee appointed to select prospective bidders has awarded contracts to BDO India and KPMG at an agreed payment of Rs.250 million and it was approved by the Cabinet on March 6 this year, official sources said.
These forensic audits were recommended by a Presidential Commission of Inquiry into the alleged bond scam in 2015 and 2016, and will also cover earlier periods since 1998, when bonds were issued outside auctions.
Holding a forensic audit examination on the EPF involvement in Treasury Bonds and Treasury Bills transactions from 2008-2014 was also recommended by the Commission.
An amendment to the Civil Procedure Code is being contemplated to expedite legal action to recover the massive loss of Rs. 1.6 billion to the government, Presidential Secretariat sources said.
The Attorney General will look into the possibility of passing a separate Act in Parliament to recover the loss to the government and the EPF avoiding delays in court procedure.
New laws will be introduced to empower the Central Bank to prevent reoccurrence of similar incidents in the future.
The Speaker of Parliament has been directed to take action against the members of the Committee on Public Enterprises (COPE) who had communicated with Perpetual Treasures Ltd’s owner Arjun Aloysius while the COPE probe was in progress, these sources said.
Meanwhile Sri Lanka will be raising 60 billion yen (US$500 million) by issuing 10-year Samurai bonds by mid next month hopefully before the Presidential elections, Dr. Coomaraswamy disclosed.
The Japan Bank for International Co-operation (JBIC) will provide a 95 per cent guarantee on these Samurai bonds.
The CB has already appointed three joint lead managers Mizuho Securities Company Ltd, SMBC Nikko Securities Inc and Mitsubishi, and UFJ Morgan Stanley Securities Co. Ltd for the bond issuance with the approval of the cabinet.
In another major development in state economic data processing field, six task forces with representatives of the CB are reviewing the process of computation of economic statistics.
The present process of data collection and computation of data particularly with respect to estimates of the Gross Domestic Product (GDP) and the Colombo Consumer Price Index (CCPI) by the Department of Census and statistics will be overhauled in accordance with the recommendations of the task forces, he said.
| SL Central Bank retains current policy interest rates; no change | |
| The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on Thursday, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 7 per cent and 8 per cent, respectively. According to a public statement issued on Friday, the board said: “It arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as the global economy. The decision of the Monetary Board is consistent with the aim of maintaining inflation in the desired 4-6 per cent range while supporting economic growth to reach its potential over the medium term. The global economic outlook continued to deteriorate largely on account of trade tensions and geopolitical uncertainties, while the global inflation outlook remained subdued with weak demand and low commodity prices. The weak global growth momentum and dampened inflation dynamics have paved way for central banks of many advanced as well as emerging market economies to become increasingly accommodative. According to provisional estimates published by the Department of Census and Statistics, the Sri Lankan economy grew by 1.6 per cent (year-on-year), in real terms, during the second quarter of 2019, following the growth of 3.7 per cent recorded in the first quarter of 2019. A notable slowdown was observed in the performance of the Services related activities, which were impacted severely by the Easter Sunday attacks. Sluggish Agriculture and industry related activities are also estimated to have grown sluggishly during the second quarter of 2019, compared to the previous quarter. Accordingly, economic growth is likely to remain subdued in 2019, and a gradual recovery is expected over the medium term. Headline inflation, as measured by the year-on-year change in the Colombo Consumer Price Index (CCPI) accelerated in September 2019 driven by increased prices of domestic food supplies. Headline inflation based on the National Consumer Price Index (NCPI), which attributes a larger weight to food items, is also likely to accelerate in September. Food inflation is expected to cause headline inflation to remain somewhat elevated during the remainder of 2019. However, with these transitory supply side price pressures easing, inflation is projected to stabilise well within the desired range of 4-6 per cent thereafter, supported by appropriate policy measures and well anchored inflation expectations. Amidst subdued demand conditions, core inflation is expected to revert to low levels from January 2020, mainly with the dissipation of the effect of the one-time large adjustment to house rentals in early 2019. Trade performance during the first eight months of 2019 recorded an improvement over the previous year, supported by a notable contraction in the growth of imports and a modest growth of exports. Tourist arrivals continued to improve, recovering gradually from the effects of the Easter Sunday attacks, while workers’ remittances moderated. Outflows of foreign investment in the Government securities market experienced in August 2019 have ceased thereafter, while the equity market recorded a modest net inflow so far during the year when both primary and secondary market transactions are considered. Although the Sri Lankan rupee depreciated against the US dollar in September partly driven by adverse speculation, this trend reversed in October with continued inflows to the foreign exchange market. The Sri Lankan rupee remains appreciated against the US dollar by 1.3 per cent thus far during the year, while gross official reserves are estimated at US$7.6 billion by end September 2019, providing an import cover of 4.5 months. Credit The year-on-year growth of credit extended to the private sector by licensed commercial banks continued to decelerate in August 2019, amidst subdued economic activity, weak investor sentiments, and elevated lending rates. In absolute terms, although credit extended to the private sector expanded during the month of August 2019 as well as during the first eight months of 2019, this expansion was far below the levels recorded in the corresponding period of 2018. Driven by the slowdown in the growth of private sector credit, the year-on-year growth of broad money (M2b) also decelerated during the first eight months of 2019. In view of the ongoing reduction in market lending rates and the expected revival of economic activity, credit expansion is expected to accelerate gradually in the period ahead, thus supporting economic activity further. The Central Bank took a number of policy, operational as well as regulatory measures during the past 12 months to ease monetary policy and monetary conditions. Deposit interest rates have declined notably with the imposition of caps on deposit rates of financial institutions in April 2019. In order to induce a faster reduction in market lending rates and enhance efficiency of the transmission of recent policy measures to market lending rates, the Central Bank imposed caps on lending rates while withdrawing caps on deposit rates of licensed banks in September 2019. These regulatory measures, which are to be reviewed by March 2020, together with reduced policy interest rates and the Statutory Reserve Ratio (SRR), are expected to result in a sizable and speedy reduction in lending rates, which will enhance the demand for credit, going forward. Considering the current and expected conditions in the economy and the financial market, the Monetary Board at its meeting held on October 10, was of the view that, at present, the measures that have been put in place during the past 12 months are sufficient to achieve the desired outcomes, given adequate time for their transmission through the financial sector. Accordingly, the Monetary Board decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank at their current levels of 7 per cent and 8 per cent, respectively.” |