Sri Lanka’s Finance Minister Ravi Karunanayake yesterday slammed the country’s Central Bank for mismanaging the public debt issuing process, following the revelation of a mystery gazette notification during the proceeding of the Commission of Inquiry (CoI) appointed to probe irregularities in the issuance of treasury bonds.
A gazette notification dated January 1, 2015, under the Registered Stock & Securities Ordinance, under the name of the then President Mahinda Rajapaksa, who was also the Finance Minister at the time, had surfaced during the CoI proceedings.
According to a Finance Ministry statement issued yesterday, the said gazette contained authorization given under section 4 of the Registered Stock and Securities Ordinance to raise loans during the year 2015 through issuance of 31 treasury bonds of different redemption periods at different interest rates at auctions as notified by the Registrar of Public Debt through newspapers.
The statement said the bonds stipulated in the gazette included many bonds issued in the past at various interest rates since 2011 as well as new bonds.
It added that there was no indication as to how bonds already issued in the past are issued again in 2015. “It appears that the gazette authorizes the past bonds also,” the statement noted.
As per the gazette, loans will be raised through those bonds within the sum of Rs.1780 billion authorized in the Appropriation Act, No. 41 of 2014.
“The practice that has been followed in the past by the Central Bank is to issue this gazette back-dated as January 1 each year after issuing all bonds during the year in a hidden attempt to comply with the requirement of the Section 4 of the Registered Stock and Securities Ordinance while mismanaging bond issuances,” the Finance Ministry statement alleged.
“As such, all treasury bonds have been issued in violation of the provisions of the Registered Stock and Securities Ordinance,” it added.
It further noted that when issuing this gazette, the required protocol has not been followed.
“With regard to issuance of a gazette by any minister, the relevant institution should send the draft to the Secretary of the line Ministry. The Secretary then obtains the legal and technical clearance from the relevant officials in the Ministry and submits the gazette for the signature of the Minister. Only after the Minister’s signature, the gazette is sent to the Government Printer to publish.
The Central Bank has not followed this procedure on this gazette in the recent past. Instead, the Superintendent of the Public Debt Department has directly sent it to the Government Printer after getting the legal clearance from the Central Bank lawyers.”
The Finance Ministry also said Information is available that the gazette dated January 1, 2016 to be published by the name of Finance Minister Ravi Karunanayake for the year 2016 also has already been sent to the Government Printer. The publication of this gazette was immediately withheld.