Presidential Commission on Bond Issue: Startling revelations on re-allocations, interest rates

Presidential Commission on Bond Issue: Startling revelations on re-allocations, interest rates

By Keshala Dias

04 May, 2017 | 6:34 pm

Three hours before the treasury bond auction on February 27,  2015, former Governor Mahendran stated that he wanted to give a shock to the interest rates.

In his evidence, Dr. Nandalal Weerasinghe, Deputy Governor at Central Bank said that after Arjuna Mahendran took office, the duties of the three deputy governors were re-allocated.

He stated that there was no reason for the Central Bank to guide interest rates on an upward trend during the period that is under investigation.

He testified that if the Central Bank loses control of the interest rates, the Monetary Policy will not be effective.

He revealed before the Commission that former Governor Mahendran had walked into the ‘Market Operations Committee’ meeting on February 27, 2015 and requested for the interest rates to be raised.

Arjuna Mahedran had reportedly said that he wanted to give a ‘shock’ to the interest rates.

Dr. Weerasinghe testified that the 2015 – 2016 period was when the largest amount of money was printed by the Central Bank in it’s history.

The witness was questioned on the proceedings of the breakfast meeting that took place on the 26th of February 2015.

At the meeting, Minister Kabir Hashim has requested the Finance Minister to release funds to settle outstanding payments for construction projects.

The meeting was attended by former Governor Arjuna Mahendran and current Minister Malik Samarawickrama.