Indrajit tells private sector to lobby for good governance

Former Governor of the Central Bank of Sri Lanka Indrajit Coomaraswamy – Pic by Upul Abayasekara

• Calls for proactive role from private sector in ensuring implementation of 16 priority recommendations in Governance Diagnostic Assessment by IMF
• Says private sector needs to drive good governance agenda
• Highlights importance of private sector being more frank
• Recalls some of the biggest captains of industry terming 2020 Budget as good after sweeping tax cuts whereas had their CFOs brought a Budget like that to them they would have kicked CFOs out straight away
• Insists ensuring good governance is in everyone’s interest and opines pressure from all could influence IMF to embed GDA implementation into $ 3 b four year EFF program

Former Central Bank Governor Dr. Indrajit Coomaraswamy on Wednesday rallied the country’s engine of growth - the private sector, to play a proactive role in ensuring the Government implements the 16 recommendations in the Governance Diagnostic Assessment (GDA) by the International Monetary Fund (IMF).

Noting that the civil society is getting involved, Dr. Coomar-aswamy stressed it was important that the private sector really take interest and ensure implementation of GDA. 

“The private sector has not spoken up. The private sector as a whole needs to get hold of that (GDA) agenda and drive it,” the former Central Bank Chief told a forum organised by the Sri Lanka Institute of Directors (SLID) and LYNEAR Wealth Management.

Noting that the IMF has set macro-economic targets under its $ 3 billion four year Extended Fund Facility program, a similar requirement isn’t explicit with regard to the 16 recommendations in the GDA.

“But if they (IMF) see real pressure coming from the country itself, I suspect then the IMF will work more vigorously to make sure that the 16 recommendations are embedded in the program,” Dr. Coomaraswamy opined at the forum at which other panellists LYNEAR Wealth Management Managing Director, Co-Founder and Chief Investment Officer Dr.  Naveen Gunawardane, World Bank Lead Economist for Sri Lanka, Nepal and Maldives Greg Smith and John Keells Hotels and Resorts Independent Non-Executive Director Anarkali Moonasinghe too stressed good governance as a priority to enhance the country’s prosperity.

Dr. Coomaraswamy recalled that in late 2019 when sweeping tax cuts were announced via the 2020 Budget a newspaper report in which “some of our biggest captains of industry saying what a good Budget it was.”

“I know that if their CFOs brought a Budget like that to them, they would have kicked them out straight away. So I think the private sector needs to be far more frank. It (private sector) has to change now that GDA has given 16 priority recommendations,” pointed out Dr. Coomaraswamy.

He stressed instead of blaming the public sector or politicians for poor governance or the lack of political will to enforce good governance, it was in everyone’s interest that the GDA recommendations be implemented since bad governance impacts all.  

However Dr. Coomaraswamy also said the Government must be commended for allowing GDA which was a first in Asia, and for publishing the same. “Now it (GDA) must be implemented. Putting it into a parliamentary committee, we know it won’t work and that’s the end of it.”

“When you read that diagnosis, you feel ashamed that your country has come to this level. So it is all our responsibility. We need to do it,” emphasised Dr. Coomaraswamy who also functions as Non-Executive Chairman of LYNEAR Wealth Management Ltd.

The 16 priority recommendations in the GDA by the IMF released in September 2023 are

1 By November 2023, establish an Advisory Committee, composed of independent experts on anti-corruption to assist in the nomination of CIABOC Commissioners and the Director General.

2 Publication of Asset Declarations for senior officials (President, Prime Minister, ministers) on a designated website in line with Anti-Corruption Law by July 2024.

3 Enact Proceeds of Crime legislation that is fully aligned with UNCAC and FATF standards by April 2024.

4 Amend the National Audit Act to enable the-the Auditor General to levy surcharges on officers, including Chief Accounting Officers, for failure to properly discharge responsibility for oversight and accountability for use of public resources.

5 Finalise and implement regulations to support the provision of beneficial ownership information as required by the Companies Act and establish a public beneficial ownership registry by April 2024.

6 Enact a Public Procurement Law that reflects international good practice by December 2024.

7 In December 2024, publish a report on a designated website on progress in increasing the proportion of competitive tendered procurement contracts in the 10 agencies determined to have the lowest level of competitive tenders in 2022.

8 Starting in March 2024, publish on a designated website: (i) all public procurement contracts above LKR 1 billion, along with comprehensive information in a searchable format on contract award winners; (ii) a list of all firms receiving tax exemptions through the Board of Investment and the SDP, and an estimation of the value of the tax exemption; and (iii) a list of firms receiving tax exemptions on luxury vehicle import. Information to be updated every 6 months.

9 Implement the SOE Reform Policy, ensuring that the holding company (HoCo) and the advisory committee are composed of skilled, independent, and ethical staff.

10 Abolish or suspend application of the Strategic Development Projects Act until promulgation of explicit and transparent process for evaluation of proposals and costing of investment promotion conditions.

11 Amend tax legislation to eliminate or restrict ministerial authority to introduce tax changes without prior parliamentary approval and ensure that such changes do not generate revenue losses.

12 Institute short-term anti-corruption measures within each revenue department to strengthen internal oversight and sanctioning processes and linkages with CIABOC and related criminal investigation and enforcement processes by Dec 2023 and issue a public report on steps taken and results obtained by Dec 2024.

13 Following a broad consultative process, produce a Cabinet policy paper by June 2024 on options for establishing new management arrangements for the Employee Provident Fund that terminates direct CBSL management.

14  Revise legislation, regulations, and processes relating to financial sector oversight in the banking sector, including strengthening corporate governance for banks with government ownership by improving the selection of executives and Board members.

15 By December 2024, establish an on-line digital land registry, and publish, on a designated website, a report on progress in implementing the published Plan for registering/titling all state land.

16 Establish and implement a plan to expand the resources and skills available to the Judicial Services Commission in order to enhance their ability to carry out their function and define potential options for modifying governance arrangements in the Justice sector to strengthen oversight, monitoring, and proper sector development.

The IMF Governance Diagnostic Assessment on Sri Lanka can be accessed online via https://www.imf.org/en/Publications/CR/Issues/2023/09/29/Sri-Lanka-Technical-Assistance-Report-Governance-Diagnostic-Assessment-539804