15 April, 2024


Five Questions To IMF Resident Representative

By Chandra Jayaratne

Chandra Jayaratne

Dr. Koshy Mathai

Resident Representative in Sri Lanka,

Resident Representative’s Office in Sri Lanka,

International Monetary Fund,

Central Bank Building,

Janadhipathi Mawatha,

Colombo 1.

Dear Dr, Mathai,

Press Conference on the IMF Article IV Report

I am grateful you and the International Monetary Fund for the web publication of the transcript dated 2nd May 2013, of the recent press conference on the IMF Article IV report. This web publication paves the way for the establishment of a transparent and direct public communication process, covering what transpired at the meeting, including the specific questions raised and your answers.

It is my belief, that you will be happy to extend this niche opportunity further, for effective, transparent and direct communications with members of the public, thus creating a space for further questions and answers on relevant and associated issues linked to the IMF Article IV report.

Your agreement to facilitate the aforesaid process will not only establish a direct public communication channel following the release of IMF Country specific reports, but also encourage citizens led transparent accountability mechanisms being established and enforced, leading to good governance and resultant economic growth and prosperity. This would in addition be welcome opportunity by the civil society as a whole and a continuation of the commendable recent initiative by way of a Twitter linked public communications process entertained by the Secretary to H.E. the President.

I therefore seek your kind agreement to engage in a transparent public response to the under noted five questions which are fully aligned with the intentions of the public release of IMF Article IV report.

These five questions are linked to the assurance of the macro-economic stability, effectiveness and good governance and risk management of the banking, leasing and financial services sector, a key sector influencing sustainable future growth, being a also a sector significantly impacted by monetary policy, monetary management/stability:

  1. Can the two policy rate cuts imposed by the Central Bank over the last seven months and the significant reduction in Statutory Reserve Ratio by 2percentage points from 8% to 6% announced effective July 2013, by itself be sufficient to promote and enhance value adding credit growth associated with competitive lending rates, and spur sustainable and inclusive growth? Are there any associated more priority and fundamental socio-economic policy reforms and trade and business friendly operating environment creation strategies and linked governance practices in general, that must be signaled with leadership commitment for inclusive and sustainable growth to be a reality in Sri Lanka?
  2. Are the stakeholder risks of banks, leasing companies and financial services entities operating in Sri Lanka, especially risks of depositors, effectively managed? Have such risks been enhanced in the past year by the;
    1. Enhanced lending to State Owned Enterprises
    2. Foreign currency borrowings of banks, leasing companies and financial services entities operating in Sri Lanka,
    3. Portfolio mismatches of borrowings and lending of banks, leasing companies and financial services entities operating in Sri Lanka,
    4. Excessive investments in long term projects by banks, leasing companies and financial services entities operating in Sri Lanka,
    5. Statutory Reserve Ratio reduction and state directed credit growth of banks, leasing companies and financial services entities operating in Sri Lanka,
  3. Will good governance expectations and international best practices led commitments in the direction, operation and management of private banks, leasing companies and financial services entities operating in Sri Lanka, be negatively impacted or influenced by any pressure  exerted by the Authorities, through the appointment of directors to such boards, leveraging the voting power of state controlled provident/pensions and trust funds, state owned banks, state insurers,
  4. Should the Central Bank and the Ministry of Finance, with the intent of greater transparency and good governance, annually compute and table as a part of the Fiscal Responsibility Management Report, the Fiscal Gap?
  5. Are there any reforms and best practices led change management process, that IMF would recommend to make the computation of published key economic outcomes more transparent and accurate in the Sri Lankan context (examples like GDP growth rate, GDP sector performance, per capita GPD, Inflation, budget deficit, trade balance and balance payments, unemployment statistics, household income data, poverty indices, tourism inflows, worker remittances, etc

The responses to the above questions as a continuing process of supplementing, extending and updating the transparent communications and public awareness process initiated by you and International Monetary Fund, linked to the Public Information Notice and transcripts of the press conference on the IMF Article IV report, will be greatly appreciated and add value public awareness, public debate and good governance led advocacy by stakeholders of society. These responses will also be of particular interest to business leaders, academics and analysts and also to stakeholders of banks (especially depositors),examining risks of the banking and financial services sector and looking for amber lights that may signal a potential banking crisis in the offing in the future requiring prior effective risk management.

I look forward to your kind public response.

Yours Sincerely,

Chandra Jayaratne

26th June 2013.

cc. Dr. Sarath Amunugama, Deputy Minister of Finance and Planning

Secretary to H.E. the President,

Secretary, to the Treasury,

Governor, Central Bank,

Banking Ombudsman,

Chairman, Ceylon Chamber of Commerce,

President, Bankers Association,

President, Organization of Professional Associations

President, Sri Lanka Economic Association,

President, Chartered Financial Analysts Association,

Executive Director, Institute of Policy Studies,

Executive Director, Transparency International Sri Lanka

Editors of Media- for public disclosure in the interest of transparency and good governance

*Chandra Jayaratne is a past Chairman of Ceylon Chamber of Commerce, a Fellow of the Institute of Chartered Accountants of Sri Lanka and a Fellow of the Charted Institute of Management UK. He is the “Sri Lankan of the year 2011.”

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Latest comments

  • 0

    It is good if you get a response from IMF or from any body to whom you copied your letter. According to some reports the reduction of SRR (Statutory Reserve Ratio) by 2% would help commercial banks to retain about Rs. 40 billion. This will enable the banks to lend additional Rs. 400 billion if right demand exists. Such a massive credit growth has the potential to depreciate the rupee severely as we experienced in the first quarter of the last year. Economies crashes amidst GDP growth if the monetary stability is not ensured. I think this seemingly aggressive move risks the monetary stability perhaps within months.

  • 0

    Chandra – you are barking up the wrong tree man! Good questions, but the IMF with its overpaid “experts” form the Club of Rich nations has NOT done its assigned jobs of ensuring stability of the
    international financial system because it is the MOST intellectually corrupt and dishonest of Banks.
    IMF closed its eyes to the rot in the banking system and its oversight bodies which has led to the sub prime mortgage and banking debacles and stock market crashes in EU and US because it was all about trickle up – save Wall street at the expense of high street. IMF only cares about saving the big CRONY Capitalists and LENDING! It was almost shut down because it did not have any clients in the 90s and Joseph Stiglitz had made a massive critic of it.
    IMF and World bank should be SHUT down for promoting trickle UP and NON-INCLUSIVE economic policies whereby INEQUALITY grows as the poor are forced to subsidize the rich to get richer.
    TRICKLE UP is the name of the Breton Woods twins game and to expect straight answers from them about inclusive development is odd to say the least!

  • 0

    IMF policy is to lend paper money to the developing countries and keep them permenantly indebted to the developed countries. As we can see, in the absence of good governance, debt begets greater debt.

    Govt has now passed the debt burden to unsuspecting account holders of commercial banks. It is now their money that is at risk and depreciating by the day. When will the bubble burst?

  • 0


    “Five Questions To IMF”

    Shall I give you 02 questions to Chandra ?

    1) Why didn’t you copy your letter to President Chartered Accountants of SL ? In which you caime to be a fellow ?

    2) Did you ever make any noise to Implement SOX act of USA ? which brought Arthur Anderson to knees & was copied in Toto by many other countries ? to bring accountability at home , to public Accountants & corporate bosses in Sri Lanka ?

    GOSL can very well manage it’s finances , if Corporate taxes are collected ( which is not even 10% of due at present) , without putting any burden on public ,or borrowing at commercial rates, as it is done in Europe & US , if our public accountants practice their profession ethically, without being only “go between” of Corporate clients & Tax authorities to determine Bribe to pay in millions, for tax evasion in dozens of Billions.

    You better practice before you preach to others.

    • 0

      John..You Know.. Sucker is born in SL every second… Not minutes, They are Major League.

      • 0

        These guys think general public are idiots but we know who these guys are , we’ve seen best corporate / professional practices /decency/transparency/tax compliance in developed countries , that may be the very reason Europe / north America never experienced any youth uprising, because they did not see poverty due to bad economic practices in Capitalist Economy where private sector has been the engine of growth.

        By contrast we had 03 costly uprisings JVP/LTTE/JVP, they wouldn’t have taken their lives if they had a decent life in this country, these idiots never think they have a social responsibility , only interested in making some more billions for themselves only, only other hand this corporate guys are the very people financing major political parties at every election.

        Pot calling kettle black. At least now they should call for better laws & regulations to handle corporate corrupt practices, such as SOX of USA ( I doubt these guys have ever heard of those)

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