Presidential Commission: Day 23 – CBSL deputy governor provides evidence

Presidential Commission: Day 23 – CBSL deputy governor provides evidence

Written by Keshala Dias

28 Mar, 2017 | 8:34 pm

Issuing 30 year bonds – Was it a directive of the Monetary Board or the Governor of the Central Bank?

Day 23 of the Presidential Commission:

Providing evidence today, March 28, the overnight witness, P. Samarasiri said that at the Monetary Board meeting on February 23,2015, the then Governor Arjuna Mahendran, instructed the Board to issue 30 year bonds in that very week.

The reason given was to extend the yield curve to restructure the country’s debt profile.

According to the witness, as there were no other suggestions from members of the board, the Governor’s directive was noted down in the minutes as what was decided upon.

The breakfast meeting dated February 26,2015 was also raised before the commission.

The witness said the meeting was centred on obtaining local funds from the government for road development projects as international funds were over. The Finance Minister resisted giving the funds, citing that some of the contracts were unsolicited.

As the witness was supervising the Public Debt Department, he was asked as to how he came to know of the auction dated February 27,2015.

He responded by stating that he had seen it in the press release the day before.

A telephone conversation between Samarasiri and Arjuna Mahendran made at the Tender Board meeting on the day of the impugned auction, saw many details come to light.

Samarasiri revealed that Mahendran had given him three reasons for giving a directive to accept Rs. 10 billion in bids.

  • There would be high interest rates in the market in the future
  • The liquidity in the market
  • Government required funding

On the matter of the Tender Board meeting, the witness said that he was enraged over the Governor’s directive given during a visit to the PDD.

He questioned the existence of a Tender Board if the Governor can issue directives of this nature. He added that during his career he had no experience of any Governor intervening in an auction process.

Meanwhile, the Monetary Board of the Central Bank has decided to take disciplinary action against any official of the Central Bank where there is evidence of wrongdoings reported while managing the EPF account.

Issuing a communique, the Central Bank stated that the Monetary Board has held discussions with regard to the report on the examination of EPF transactions in government securities.

The Monetary Board has held the discussion with the aim of taking suitable action in respect to the findings on the report.

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