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Draft for a new Monetary Law Act unveiled

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ECONOMYNEXT –Sri Lanka has unveiled a draft for a new Monetary Law Act which will give independence for the central bank to operate flexible policy and implement both monetary and exchange rate policy.The central bank will have two primary objectives under clause 06.

(1) The primary object of the Central Bank shall be to achieve and maintain domestic price stability.

(2) The other object of the Central Bank shall be to secure the financial system stability.

It is also seeking from legislators powers to support government policy and target an output gaps (growth).

Subject to the two objectives the central bank “shall” support the general economic policy framework of the Government provided for in any law.

In seeking price stability, the central bank “shall take into account, inter alia, the stabilization of output towards its potential level.

In the existing law there was no specific legal authority for the central bank to print money to boost growth, ex-Deputy Central Bank Governor W A Wijewardene had said. The stimulus or output gap targeting which led to currency crises was probably illegal.

The central bank would implement both money and exchange policies under the new law.

According to the new Section 20:

(1) Subject to the provisions of this Act, the powers, duties and functions of the Central Bank shall be to –

(a) determine and implement monetary policy; (b) determine and implement the exchange rate policy;

(c) hold and ensure the prudent and effective

management of the official international reserves of Sri Lanka.

According to Section 11 of the new law:

“(1) There shall be a Monetary Policy Board of the Central Bank (in this Act referred to as the “Monetary Policy Board”), which is charged with the formulation of monetary policy of the Central Bank and implementation of a flexible exchange rate regime in line with the flexible inflation targeting framework in order to achieve and maintain domestic price stability.:

In the previous law, under primary objectives, then Central Bank Governor A J Jayewardene removed a responsibility for exchange rate policy (stabilizing the external value do the rupee), after more active open market operations was developed as a pre-cursor to moving towards inflation targeting with a floating rate.

However, in practice the central bank continued to intervene in forex markets, collect reserves and sell, operating a so-called impossible trinity policy regime, triggering a series of currency crises especially from 2012 amid more aggressive open market operations, eventually leading to external default, according to critics.

Critics have called for tight laws to block the central bank from operating conflicting money and exchange rate policies and either confine it to operating monetary policy (low inflation targeting with a controlled interest rates), abandoning exchange rate policy or operate a hard peg and abandon money printing to suppress rates.

Legislators have in the past uncritically passed exchange and import controls law robbing the liberties of citizens, instead of blocking conflicting money and exchange policies of the central bank.The new law however will not have provisional advances, a method that limited money printing above the 1950 anchor to 10 percent of expected revenues.

Legislator Kabir Hashim, an economist, has already fired a warning shot, pointing out that the country’s economic bureuacrats have ignored top classical economists who advised Sri Lanka including Singapore economic architect Goh Ken Swee (who called for a hard peg) and B R Shenoy who called for a clean float.



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PM meets Sri Lankan community living in London

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Prime Minister Dr. Harini Amarasuriya, who is currently on an official visit to the United Kingdom, met with members of the Sri Lankan community living in London on Wednesday [20th]  and engaged in cordial discussions.

Despite the event being held on a weekday, it was notable that nearly one thousand Sri Lankans representing the Sinhala, Tamil, and Muslim communities attended with great enthusiasm.

Addressing the gathering, Prime Minister Dr. Harini Amarasuriya stated that despite natural disasters and international crises, the present government has succeeded in stabilizing the country’s economy while providing relief to the people. She further noted that Sri Lanka’s political culture has now undergone a positive transformation that is irreversible.

Minister of Women and Child Affairs Saroja Paulraj, addressing the event, stated that a governance system has now been established in the country where all communities are treated equally and the benefits of economic development are shared fairly among all citizens.

Moving away from the traditional method of political gatherings, the event also provided an open platform for members of the Sri Lankan community to directly raise questions and express their views to the Prime Minister and the Minister.

Commenting on the organization of the event, the organizing committee stated that all expenses, including dinner, were borne by the participants themselves. The organizers further remarked that it is unsurprising that opposition groups, accustomed to organizing such events through the misuse of public funds, appear unsettled by this transparent process.

The occasion was attended by the Minister of Women and Child Affairs Saroja Paulraj and Sri Lanka’s High Commissioner to the United Kingdom, Nimal Senadheera.

[Prime Minister’s Media Division]

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Prime Minister Dr Harini Amarasuriya meets Foreign Secretary of the United Kingdom

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Prime Minister Dr Harini Amarasuriya currently undertaking an official visit to London, United Kingdom, to participate in the 43rd Commonwealth of Learning (COL) Board of Governors Meeting 2026  held a bilateral meeting with the Yvette Cooper MP, Foreign Secretary of the United Kingdom ON Wednesday [20]. The Prime Minister was accompanied by Sri Lanka’s High Commissioner to the United Kingdom, Nimal Senadheera, along with officials from the Sri Lankan High Commission.

During the meeting, the Prime Minister conveyed Sri Lanka’s appreciation to the United Kingdom for the support extended in the aftermath of Cyclone Ditwa, including ongoing rebuilding and recovery assistance. The Prime Minister also commended the United Kingdom’s support in facilitating increased bilateral trade and exports for Sri Lanka.

The Prime Minister briefed the UK delegation on Sri Lanka’s recent economic developments and policy priorities, the Government’s commitment to advancing human rights and reconciliation, as well as Sri Lanka’s positive growth trajectory.

The two sides also exchanged views on current global geopolitical developments, challenges in the energy sector, and the importance of enhancing regional connectivity and long-term energy security.

Both sides also emphasised the importance of strengthening structured academic mobility frameworks while ensuring fairness, clarity, and integrity within migration systems.

They also reaffirmed their commitment to further strengthening bilateral cooperation between the two countries in areas of mutual interest.

[Prime Minister’s Media Division]

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Suspects involved in sureties controversy granted bail

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Kapila Chandrasena

Airbus bribe case:

Colombo Additional Magistrate Lahiru Silva yesterday (20) granted bail to Mohamed Riswan and Mohamed Irshan, who allegedly received money to stand as sureties for the late former SriLankan Airlines CEO, Kapila Chandrasena. They were identified as residents of Sanchi Arachchi Watta, situated next to the Hulftsdorp court complex.

Chandrasena was found dead at his brother-in-law, Aravinda De Silva’s residence, at No. 38, Pedris Road, Kollupitiya, on 8 May.

The Magistrate also granted bail to B. A. Tissa and Perumal Ganesh, who arranged for Riswan and Irshan to stand as sureties for Chandrasena, who is under investigation for allegedly receiving a USD 2 million bribe through his wife to facilitate an Airbus deal. They, too, residents of Sanchi Arachchi Watta, were granted bail on two personal bail of Rs. 500,000 each.

Airbus had to pay USD 4 billion in penalties after admitting it had paid huge bribes to secure contracts in 20 countries. Sri Lanka is among them.

The Magistrate directed that the Grama Niladhari should certify their residence and the relevant certificates submitted to court and to establish the financial status of those who stood as sureties for the four persons.

The court was told that Mohamed Riswan and Mohamed Irshan obtained 17 Grama Niladhari certificates from January till May 2026. On the basis of a statement recorded from Keselwatta Grama Niladhari S. Nilantha Silva police informed court that the first suspect had obtained 10 certificates and the second person seven.

Fourth suspect Ganesh had first met those who stood as sureties, on 05 May, in the court premises and struck the deal. Crime OIC of Keselwatta Police, Sub Inspector K.W.D. Anuruddha, told court that Mohamed Riswan, Mohamed Irshan and B. A. Tissa hadn’t even known who Chandrasena was and were not related to him in anyway, according to investigations. Police requested that the four persons be further remanded.

The Magistrate granted them bail and set the next hearing for 25 June.

Legal sources said that such illegal practices were rampant, and in this particular case the Court Registrar should have been able to see that the sureties were very much unlikely to be relatives of Chandrasena.

By Shamindra Ferdinando

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