$5.5 bln spent to defend rupee
Sri Lanka Parliamentary Committee on Public Enterprises (COPE) is to recommend a special commission to investigate and punish officials who were responsible for the action taken by the Central Bank to defend the rupee at the rate of Rs. 200 -203 to the US$, spending much needed foreign exchange.
This was stated by COPE Chairman Prof. Charitha Herath at a meeting attended by high officials of the Finance Ministry and the Central Bank and held at the parliamentary complex recently. It has been revealed that a massive sum of $5.5 billion from foreign reserves had been wasted to defend the rupee despite objections of two members of the Monetary Board and several Central Bank officials during 2020.
The decision to defend the rupee by selling foreign reserves was taken at a Monetary Board policy rate review meeting held in 2020 by a 3-to-2 majority verdict with the then Central Bank Governor Prof. W.D. Lakshman, former Treasury Secretary Sajith Attygalle and businessman Samantha Kumarasinghe voting in favour. Former Deputy Governor of the Central Bank Rani Jayamaha made this startling revelation when she responded to a request for comments by the COPE Chairman on this matter at the meeting. Dr. Jayamaha said she and another board member Sanjeeva Jayawardena strongly opposed to this decision requesting to record their protest in the board minutes.
She noted that several Central Bank officials have informed to the Monetary Board about the possible repercussions when holding onto the rupee for a considerable period selling dollars from the foreign reserve.
SJB MP Dr. Harsha de Silva told the meeting that the Monetary Board should bear the responsibility for this decision and it is disheartening to note that it was approved by one vote of a businessman.
Meanwhile COPE has requested the People’s Bank for a report with details of companies which were granted loans (currently non-performing) worth Rs. 54 billion. COPE has also received a report from the Treasury saying the Bank of Ceylon’s non- performing loans totals Rs.41.7 billion, official sources said.
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