Move by Finance Ministry to take over public debt dept. from CBSL a pressing concern

by Faraz Shauketaly 16-09-2018 | 8:06 PM
COLOMBO (News 1st) - Concerns have been expressed over the announcement made by the government that the Public Debt Department of the CSBL, will be moved to the Ministry of Finance. In other parts of the world like the United Kingdom, Singapore and Japan, for instance, the functions of the banking regulator is clearly distinct from the role of the policy maker. The regulatory bodies act without a political bias. In all these countries transparency, accountability, responsibility and the rule of law are all very well established. The CSBL too similarly enjoyed its independence up until the politicization of the institution. Path to politicization In the year 2015, Ranil Wickremasinghe listed the CBSL under his Ministry of National Policy Planning and Economic Development. Following that unprecedented move, came along the appointment of Arjun Mahendran who was handpicked by the Prime Minister himself. As a result, the already politicized nature of the CBSL suffered from yet another blow. Founding father of the Central Bank John Exter envisaged that no person whose integrity has been questioned should serve, let alone be provided with the position of being governor at the Central Bank. In spite of such a sentiment and reservations voiced by senior cabinet members like Patali Champika Ranawaka, Rajitha Senaratne and the President himself, the newly appointed PM stood firm on his ground and assured his colleagues that Mahendran is the ideal choice. The Presidential Commission of Inquiry held that Governor Mahendran had acted mala fide in the interest and to the benefit of Perpetual Treasuries a company in which his son-in-law was a beneficial owner. The former Governor now a fugitive from justice admits himself that he had acted on the insistence of the Prime Minister. Inactive regulatory bodies of Sri Lanka  Sri Lanka has an unfortunate history of inaction by regulatory bodies, one such instance is where the Securities Exchange Commission (SEC) had promised to conduct inquiries into the infamous manoeuvre also known as pumping and dumping in the pre-election times. Post-election, the promises were unkept. Despite several assurances to the contrary, the SEC failed to have any inquiry resulting in litigation against anyone. In addition, inaction has been the keyword with also the Bribery Commission that fails spectacularly to act in a proactive manner in several cases including the recommendations of the Bond Commission. Yet recent reports state that the Bribery Commission has been busy procuring luxury vehicles for themselves whilst having made excuses that they are understaffed. Three legislators have finally agreed that they had received money from the bond scam. Yet no visible action has been taken to recover any of it paid out in essence as virtual incentives, has been initiated. Most people agree that the political ambience of the country has been reduced to a mere joke. Back to the pressing concern, a logical question lies, in order to move the public debt department away from the CBSL, the Ministry of Finance should have a proper purpose. Having a single regulatory body for the financial industry in a country that has a predominant culture struggling with political corruption, and in which the rule of law, transparency, and accountability are intertwined with political patronage just proves the premature mentalities of those responsible at its best. Regulators must start regulating independently before such unforecasted moves could be adopted.