Country to bear over 10 billion rupees in next 30 years due to controversial Central Bank bond issue

Wednesday, 26 April 2017 - 19:02

A former Acting Governor of the Central Bank Dr. W.A. Wijewardana says the government has to bear a loss of over 10 billion rupees next year due to the controversial bond issue.

Testifying before the presidential commission which is probing the controversial bond issue, Dr. Wijewardana said that the government had to bear an additional loss of 532 million rupees at the time the bond issue was conducted.

Dr. Wijewardana has functioned as an acting governor of the Central Bank on several occasions and an advisor of the previous and the current government.

He said that no Central Bank governor had interfered in taking decisions with regard to bond issues during his 36 year tenure at the Central Bank.

He said the Central Bank governor should allow the Public Debt Department to propose solutions how to meet financial requirements of the government and let such proposals to be discussed in the tender board.

Dr. Wijewardana further told the Commission that former Central Bank governor Arjuna Mahendran overlooked this practice and has interfered in the process, thereby making a loss of over 10 billion rupees to the government.

He pointed out that the money could have been obtained from the EPF or Bank of Ceylon rather than borrowing from private primary dealers.

Dr. Wijewardana said therefore the instruction given by Arjuna Mahendran to borrowing large amounts of money such as 10 billion rupees at a high interest rate through an auction could not be justified at all.

In addition, it was revealed before the Commission today that opportunity which led to financial abuse was given to private primary dealers to enable them to purchase bonds through direct placement during the tenure of former Central Bank governor Ajith Nivard Cabraal.

It has not yet been revealed whether the Monetary Board had permitted such transactions executed when Cabraal was in office.

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