Sri Lanka to probe economic data, manage fallout
COLOMBO (EconomyNext) – Sri Lanka’s new administration is going ahead with a promise to probe controversial economic data, so that accurate data could be found for the administration to go ahead with its economic agenda, deputy planning minister Harsha de Silva said.
"We haven’t formally started it (the probe) but we are talking to the senior people," de Silva told reporters shortly after taking office Saturday.
He said more discussions will be held with the Deputy Governors of the Central Bank, the new Governor, Secretary to the Treasury and his deputies, the Director General of Census, who would be could provide an "accurate appraisal as to what the current status of the economy is."
"Once we do that then we will assess what needs to be done," de Silva said. "But we will certainly go ahead and deliver on the short term promises."
Revisions of data can have negative short term effects on sovereign ratings and investor confidence. Economists say the administration may have to keep in close touch with rating agencies about any probes which may result in data revisions.
"We will be responsible," he said. "We will manage the bad news in the appropriate way that will not hamper the ratings or the confidence that the external community has in us. But the truth must be found out."
The administration has appointed Ravi Karunanayake as finance minister, RHS Samaratunga as Treasury Secretary, Kabir Hashim and Eran Wickramaratne as minister and deputy minister of investment promotion.
Wickramaratne is expected to keep a close eye on the Board of Investment.
De Silva will work with Prime Minister Ranil Wickramasinghe, who is planning minister.
The administration is also expected to appoint Arjuna Mahendra, an international banker as Central Bank Governor. Mahendran has previously served as head of Sri Lanka’s Board of Investment and has been with several international banks as well as being at the Central Bank in early years.
‘We have a good team, Arjuna, RHS (Samaratunga) at the Treasury, Ravi (Karunanayake), and Eran (Wickramaratne)," he said.
There have been some concerns raised in financial circles about a conflicts of interest over Mahendra’s proposed appointment after a media report about a family connection to an active stock market player whose firm had dealings with the Employees Provident Fund.
The current administration has been partly brought into power with the help of activists who were pushing for good governance and transparency.
One governance activist said appointments would not be questioned at the moment as the priority was to get constitutional reforms in that would re-establish rule of law and put in place a system to combat corruption.
Others say they will watch and see whether the promises would be carried out but there were high expectations of the administrations and any misstep would have political costs.
Jathika Hela Urumaya, a constituent party of the current administration has said they would be the first to take to the streets if action was not initiated on corrupt deals.
De Silva said probes on controversial EPF stock market deals, the purchase of Greek bonds by the Central Bank as well as suspected inflated infrastructure will go ahead as planned.
De Silva, an economist who was also a former bankers was a key critic of some of the deals made by the EFP.
He said already investor who were hesitant about coming to Sri Lanka was making contact with the new administration.