Chandra raises posers on CB’s accountability over past forex policy

Good governance activist and former Chairman of the Ceylon Chamber of Commerce Chandra Jayaratne is raising issues of accountability on the part of Central Bank over past management of foreign exchange, following the 2012 Budget’s devaluation move. “With the Budget directing the Central Bank to depreciate the Sri Lanka Rupee by 3%, the Central Bank and the Monetary Board must be held accountable for the policy decisions taken over the last four to six months in regard to the exchange rate policy,” Jayaratne said.

The Central Bank must also justify with transparency and integrity the strategic action taken and also any lessons learnt from the experiences in the context of a post audit on management effectiveness of the policy regime adopted.

He was of the view that for greater transparency and accountability the Central Bank must disclose the value of market interventions it has made monthly over the past six months, in purchasing and selling its foreign exchange holdings.

Another is the net foreign exchange reserves of the Central Bank at the end of each of the past six months; Sri Lanka Rupee-US Dollar cross rate end of each month over the last six months and the US Dollar Cross rate in international markets versus the competing other currencies of Euro, GBP, Japanese Yen and Indian Rupee.

Jayaratne also emphasised that the Government must explain the rationale and justification for the Budget announcement driven depreciation of the rupee by 3% as against the expected market oriented float of the rupee.

This was in a context where as the US Dollar was gaining upwards in the market against other international currencies in the weeks ahead (the gain over the last three days of the US dollar against the Euro being around 1%) and Indian Rupee was depreciating against the dollar (by over 5% in a month).

Jayaratne said that timely disclosure of information on questions raised is critical for all stakeholders to express their view point well in time for the Committee Stage Debate in the Parliament involving legislators from the Government and Opposition who can then engage in an intellectual value adding debate around Section 74 of the 2012 Budget, enriched by the views of civil society.

“An intellectual debate as well as integrity and transparency oriented transparent accountability by the Central Bank and the Monetary Board is paramount, as it is commonly believed that the Central Bank had in the last two months and similarly even in the previous three months had made market interventions linked transactions of US$ 500 million,” claimed Jayaratne.