Finance Minister Ravi Karunanayake on Monday attended a meeting between primary dealers in Sri Lanka’s money markets and the Central Bank (CB), traders said.
His presence raised eyebrows as the CB doesn’t come under the purview of the Finance Ministry even though the CB floats bonds and Treasury bills on behalf of the Treasury (an arm of the Finance Ministry).
“Apart from that, a minister attending a Central Bank meeting in the CB office was also a bit unusual,” one trader said. The CB comes under the Prime Minister’s Ministry of Economic Planning.
The Minister was critical of some of functions of the CB and urged the officials to rectify it. He was also of the view that the Prime Minister and the Government were facing unfair criticism on the controversial February 27 bond issue.
The unusually large amounts of bond issues in the past 10 days issued by the CB was due to the abandonment of private placements promoted largely during the former Governor’s tenure. One trader said that just around 25 per cent of bond issues came through auctions while the others were through private placements. “The CB has done the right thing in discontinuing private placements and now placing bonds at public auctions,” one trader said.
Senior Deputy Governor P. Samarasiri presided over at the meeting with other officials on the 15th floor of the CB office, after the Finance Minister left the meeting. The meeting was sought by the Primary Dealers Association to discuss many issues including a suggestion to stick to accepting advertised amounts in a bond issue rather that accepting the oversubscribed amounts. The controversial bond issue involving Perpetual Treasuries didn’t figure in the discussions.