Sri Lanka is poised to receive the International Monetary Fund (IMF) financial package before the end of March. Earlier this week, the IMF’s Managing Director Kristalina Georgieva tweeted that she welcomes the progress made by Sri Lankan authorities in taking decisive policy actions and obtaining financial assurances from all the major creditors, including China, India, and the Paris Club. “We look forward to presenting the IMF-supported program to our Executive Board on March 20th’, she tweeted.


President Ranil Wickremesinghe is optimistic that the USD 2.9 billion package, which will be given in tranches, will help resuscitate the ailing economy, and many more lenders will support Sri Lanka to overcome the financial impasse. The significance of this development is that it is expected to give Sri Lanka access to international markets and will be a confidence-building measure.


The president told parliament this week that the government had fulfilled its tasks, obligations, and prerequisites to obtain the IMF package. Such statements have also prompted skeptics of IMF programs to question how much autonomy and ownership of the IMF program Sri Lanka, as a sovereign nation, actually has.


One of the IMF’s preconditions is to make the Central Bank an autonomous body without political interference. The government took cognizance of this requirement of the IMF and the US Senate Foreign Relations Committee and drafted the Banking Act to comply with international requirements. The bill seeks to grant independence to the Central Bank by allowing it to make decisions free from political interference and allowing it to focus solely on the economic stability of the country. It also seeks to create a board of directors composed of individuals from outside the government and from different sectors of the economy to oversee the functioning of the bank. Hence the proposed bill serves as a proviso to unlock the IMF package.


An updated Central Bank Act will virtually project its image as one devoid of external pressures, aiming to give the bank a more credible and independent outlook. Economic experts argue, however, that the act as it is will result in instability within the institute. This may spell doom for the Central Bank and be disastrous for the country.


A composite piece of legislation will not come into force unless several gaping holes existing in the proposed bill are meticulously filled.


Economic experts argue that the bill does not provide the Central Bank with enough power to implement monetary policies without external pressure and influence. This means that the Central Bank could end up compromising its autonomy, resulting in an economy that is not able to manage money and financial resources effectively.


An incredibly significant change introduced in the proposed bill is the removal of the Finance Secretary from the decision-making process of the Central Bank. He is not a member of any board. However, he has been given a role at the Central Bank and is a member of a newly formed council called the Coordination of Fiscal, Monetary, and Financial Stability Policies Council. This council is simply a body to share information and exchange views on macroeconomic development, outlook, and risks. The governor of the Central Bank is the chairman of this council. It is represented by the government through the Finance Secretary and Secretary to the Ministry of Economic Policy, if such a ministry exists. Otherwise, it is a two-person exchange of views that cannot have a chairman.


Along with the proposed Central Bank Act, the government is also contemplating introducing a comprehensive anti-corruption act with more teeth to minimize corruption in the public sector and in other spheres of governance, including the private sector.


The proposed law was drafted in line with the United Nations Convention on Anti-Corruption, which Sri Lanka ratified in 2004.


This law seeks to replace the Bribery Act, the Commission to Investigate Allegations of Bribery or Corruption Act, and the Declaration of Assets and Liabilities law. This is because the proposed legislation more or less enhances the scope of those laws and makes them more effective than they used to be.


The United Nations Convention against Corruption is the only legally binding universal anti-corruption instrument. The Convention’s far-reaching approach and the mandatory enactment of many of its provisions make it an ideal tool for developing a comprehensive response to a global problem. The Convention covers many different forms of corruption, such as bribery, trading in influence, abuse of functions, and various acts of corruption in the private sector. The five main areas it covers are: preventive measures, criminalization and law enforcement, international cooperation, asset recovery and technical assistance, and information exchange. A highlight of the convention is the inclusion of a specific chapter on asset recovery. This chapter aims to return assets to their rightful owners, including those in countries from which they have been taken illegally. The vast majority of United Nations member states are parties to the Convention.


However, before this bill is passed in parliament, it needs a critical evaluation and a healthy public debate because certain provisions may infringe on the personal liberties of the people as enshrined in the constitution.


The enacted law will enable the creation of an independent commission with financial independence. Furthermore, any authorized officer of the commission may, without an order from a magistrate and without a warrant, arrest any person suspected of committing an offense under the provisions of the Act.


Section 58(1) of the Bill prescribes more repugnant measures, where it states that “an authorized officer of the commission may apply in writing to the High Court for a warrant authorizing the undercover tracking of any conduct and recording of any communication if such an officer has reasonable grounds to suspect or believe that a person has committed, is committing, or is about to commit an offence.  


Transparency International Sri Lanka (TISL) notes that Sri Lanka does not lack laws to deal with bribery and corruption, even at present. However, the enforcement of such laws remains inadequate.


While the country is struggling to apply even the existing anti-corruption laws, TISL notes seriously that the independence of any anti-corruption body that is proposed by the Executive can only be assured if a constitutional amendment adequately provides for it.


TISL further notes that while the bill seeks to ensure public access to declarations of assets and liabilities, prevent the abuse of the investigative powers of the proposed commission, guarantee its independence, increase penalties, address private sector corruption, and “have the liberty to make information publicly available about the progress of investigations’, it fails to take into account issues such as international asset recovery and the regulation of election campaign finance. International asset recovery is essential to tackle the global nature of corruption. To ensure that politicians do not use money to influence elections, election campaign finance has to be regulated. Without these measures, the proposed bill does not go far enough to address the problem of corruption.


However, it should be noted that the United Nations Convention against Corruption has specifically mentioned asset recovery and dedicated a chapter to the subject. This is imperative in Sri Lanka’s context.


Nevertheless, the general call is to implement existing laws to derive maximum benefit from them before bringing in this controversial piece of legislation. The government’s position is that existing legislation lacks adequate provisions to deal with critical situations.


The proposed commission appears to be independent in its outlook, and extreme caution should be exercised when appointing members to the commission. Appointing men with political affiliations or other interests that may harm the independence of the commission must not be done.


Speaking with regard to the commission’s ability to make arrests without warrants, Minister of Justice Wijedasa Rajapakshe at one point emphasised that this is not a quasi-judicial power, as the police too are able to arrest people without a warrant.


The Minister, elaborating on the provisions of the bill, said that clauses with regard to covert monitoring and recording of any communication of anyone if such an officer has reasonable grounds to suspect or believe that a person has committed, is committing, or is about to commit an offence under this proposed legislation are common to many countries, and they are to ensure that the public sector functions without any corruption or illegal activities.


The bill has now been directed to the Attorney General to ascertain whether the provisions are inconsistent with the constitution. Thereafter, it will be sent for gazetting and presented to Parliament for approval.


Be that as it may, though all the political parties are optimistic that the local government election will be held by the 25th of April, indications are that the elections will not take place as scheduled. The clue was the comment by the president, who said that the government had fulfilled all the obligations to obtain the IMF financial package and the country could hold elections in 2024.


Meanwhile, the disturbing factor was that parliamentarian Premanath Dolawatte had taken exception and made a long statement with regard to the Supreme Court judgment on the conduct of the local authorities election. This was because the judgment restrained the Finance Secretary from withholding money allocated for the election. He said that the court infringed on parliamentary privileges. However, many dismissed his argument, saying that it had nothing to do with the privileges of parliament since the judgment was on finances already allotted for the purpose.


The leader of the opposition, Sajith Premadasa, also made the point that the country’s judiciary should not be interfered with under the cloak of parliamentary privileges. The Bar Association of Sri Lanka also urged the government to refrain from undermining the judiciary by making announcements in Parliament and referring the interim order for a review by the Parliamentary Privileges Committee.


The BASL had reminded the government what happened in the past, to learn lessons from history, and to refrain from undermining the judiciary.


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