SriLankan Airlines capital injection in 2012 broke budget limit
ECONOMYNEXT – Sri Lanka debt office managed by the Central Bank had issued 14.2 billion rupees in Treasury Bonds as capital injection to state-run SriLankan Airlines, exceeded a budget allocation in 2012, a commission of inquiry was told.
Central Bank Governor Indrajit Coomaraswamy, testifying at a Presidential Commission of Inquiry on incidents that took place before his appointment in 2016, said that only 10 billion rupees in capital injection was allowed for SriLankan Airlines in the 2012 budget.
The issuance of 14.2 billion rupees in Treasury Bonds would have required further approvals, he said.
The request for the issuance had come to the Central Bank from the Director General of Treasury Operations based on a directive from the Deputy Treasury Secretary.
Senior Deputy Solicitor General Neil Unamboowe said that the Deputy Treasury Secretary did not have the required approval to order such a transaction.
He questioned how the Deputy Treasury Secretary could request for such an issuance, when the Central Bank could only issue securities on behalf of the Minister of Finance.
Coomaraswamy said that according to the Monetary Law Act No. 58 of 1949 (MLA) which governs the central bank, it should consider requests from the Minister of Finance or a government agency or institution acting on behalf of him.
However, according to the Registered Stocks and Securities Ordinance No. 07 of 1937 (RSSO), which is a more specific law, only the Finance Minister has the power, Unamboowe argued.
Coomaraswamy agreed, but said that from the point of view of the Central Bank and MLA, as long as a responsible senior official from the Treasury made a request, the Central Bank had to honour it.
He said whether the Deputy Treasury Secretary had the delegated power to act in accordance with the RSSO was a problem of the Treasury.
Coomaraswamy said that he has not seen any document that a Finance Minister has issued delegating his power to a Deputy Treasury Secretary.
However, he also said that there may have been reasons for the Deputy Secretary’s actions. (Colombo/Nov27/2018)