Sri Lankaâ€™s UNP says to place EPF under public wealth trust
ECONOMYNEXT – Sri Lanka’s governing United National Party (UNP) said it would set up a public trust to independently manage private sector workers’ retirement funds which are now under the Central Bank, if it wins next month’s parliamentary polls.
The announcement, in the UNP’s manifesto for the August 17 general elections, said the trustees would be appointed by the proposed Constitutional Council.
The move to bring the Employees Provident Fund and the Employees Trust Fund, under a public trust would remove the present conflict of interest in the way it is managed.
A UNP government would set up a separate office called a debt bureau to manage government debt.
EPF funds are now handled by the central bank which also manages government debt.
EPF funds are regularly invested in government debt and it is known as a ‘captive fund’ that the state manipulates to create lower than market rates and eventually high inflation and balance of payments crisis.
Sri Lanka’s current administration has started auctions of public debt, which would make rates market driven provided and transparent provided, the announced volumes are taken, analysts say.
Central bank management of EPF funds creates a conflict of interest as the government would want to borrow at low rates while private sector workers who save money in the EPF would want a higher return on their savings.
Also, the central bank is in charge of monetary policy and usually tries to keep interest rates down.
In developed countries, government debt is managed by the treasury. (Colombo/July23/2015)