Immunity for CB Governor, officials in debt management bill
Proposed new regulations governing the management of Sri Lanka’s massive debt has a significant provision giving immunity to the Central Bank (CB), members of the Monetary Board and all officers of the banking regulator against prosecution if they act in good faith, according to the gazette that has been issued.
The new regulations under t h e A c t i ve L i ab i l i t y Management bill is aimed at better liability (debt) management and due to be presented to parliament within the next three months.
Section 9 which deals with “defence in criminal or civil proceeding” states that members of the Monetary Board, officials of CB and those work- ing for the line Minister of Ministry “cannot be held liable, either for criminal matters or civil matters for performing in good faith the duties and/ or exercising the powers given to them by this Act or any regulation, Order, decision or directive issued and made”. The Sunday Times last week reported plans for this new law.
This new bill authorises the raising of loans in or outside Sri Lanka for the purpose of active liability management to improve public debt management in Sri Lanka and to make provisions for matters connected or incidental to it.
Any loan raised for and on behalf of the Government for the purposes of refinancing and pre- financing of public debts shall be exempted from the application of the provisions of sec- tion 2 (1) (b) of the Appropriation Act, No. 30 of 2017 and also of any annual Appropriation Act which is enacted after the date of commencement of the Appropriation Act, No 30 of 2017.
Discussing the proposed new law, Deputy Minister of National Policies and Economic Affairs, Dr. Harsha de Silva told the Business Times that this bill has been endorsed by international independent rating agencies as well as the International Monetary Fund (IMF).
Sri Lanka has commenced a debt sustainability process under the supervision of the IMF, he disclosed.
Ministries of Finance, National Policies and Economic Affairs, and the CB all worked together to introduce this bill which is aimed at managing public debt to ensure the financing needs and payment obliga- tions of the Government are met at the lowest possible cost over the medium to long term consistent with a prudent degree of risk, he disclosed.
Sri Lanka’s non-commercial debt has increased alarmingly to 55 per cent in 2017 from seven per cent in 2006; he said adding that this massive debt problem is inherited from the previous Rajapaksa regime.
“We have been collecting dollars from the market for the past 6-7 months while building buffer stocks to service additional debts,” he said.
He stressed the importance of maintaining a liability management fund with input coming in from profits in managing strategic entities and money raised from the divestiture of non-strategic public enterprises.
Section 9 which deals with “defence in criminal or civil proceeding” states that members of the Monetary Board, officials of CB and those working for the line Minister of Ministry “cannot be held liable, either for criminal matters or civil matters for performing in good faith the duties and/ or exercising the powers given to them by this Act or any regulation, Order, decision or directive issued and made”
“Working with Chinese agents has a credit risk at large. The ideal scenario is to recover the full payment in advance or 60- 80 per cent prior to the tour,” he observed.
If credit is extended, it should be given after a thorough back- ground check, he pointed out adding that generally majority of Chinese agents will request credit for 60-90 days.
However when credit is extended a very close tab on payments is needed on the business handled and future business as well, he suggested.
Each company will have to carry out their own back ground checks on Chinese agents and extend credit accordingly, the SLAITO spokesman emphasised.
Most of the Sri Lankan companies have used different methods to recover debt pay- ments by complaining to the Sri Lanka Embassy in Beijing and with the help of third party payment recovery units operating in China.
Some have been successful to a greater extent while others have not been that successful, he disclosed.
Over 268,000 Chinese tourists visited Sri Lanka last year with China emerging as the second largest market, Tourism Ministry data showed. In December 2017 alone, over 19,000 Chinese tourists arrived in Sri Lanka.