By Gagani Weerakoon and Camelia Nathaniel
Opposition Leader Ranil Wickremesinghe declared in Parliament yesterday that the losses suffered from the decision by the Central Bank of Sri Lanka to invest in Greek Bonds, has mounted to an estimated Rs 3.4 billion, and questioned the government to explain the rationale behind the decision.
“The main objective of investing in overseas bonds is to earn a larger income through it. Therefore, it is customary to penetrate very scientifically into the future goals prior to engaging in such investments. They are initiated only after inquiring well into the market conditions. Still, there is no indication that such an inquiry has been made on these investments regarding Greek Bonds, “the Opposition Leader said, making a statement in Parliament.
"They are initiated only after inquiring well into the market conditions. Still, there is no indication that such an inquiry has been made on these investments. Not only that, certain facts as to whether approval of the Monetary Board of the Central Bank has been taken on this investment were exposed through the media. It was also stated that the Auditor General had said this investment is problematic. Equally, the mass media had reported that this matter the government had proceeded with despite precautions issued by the Auditor General not to invest in these Bonds. Still, what the Central Bank states is that since the investments made in the other countries were remunerative; this loss is a minor matter. Anybody can understand it to be an unfair statement. Each investment is taken separately and inquired whether they are remunerative or not under the supervision of Parliament. The Parliament cannot ignore the detrimental investments just because the total investment was remunerative," he noted.
A number of facts on financial investments by the Central Bank of Sri Lanka in Greek Bonds came to light through the mass media. Those reports revealed that these facts came to light also at the Committee on Public Enterprises (COPE) held recently. Accordingly, it has been revealed that the loss incurred by investment in these Bonds is over Rs 3.4 billion, he charged.
"According to what has been pointed out by Economic Specialists, the whole world began to see the degeneration of the economy in Greece in 2009. The most serious economic collapse that came about after re-establishment of democracy in Greece in 1974, surfaced towards the end of 2009, owing to the world economic crisis and unlimited government expenses. A clear trend of degeneration in Bonds appeared by April 2010. With a view to save the economy that was collapsing, the International Monetary Fund (IMF), and European countries offered a sum of Euro 110 billion in May 2010. The situation deteriorated by the end of 2011. It had to receive further loans in 2012. Not only that, yet another example indicating this degeneration are the figures of Gross Domestic Product (GDP) in Greece. The figures of the GDP in 2010 were minus 3.5 which became a minus 6.9 in 2011. Situation being such, nobody would purchase Greek Securities or Bonds. In fact, many who foresaw this situation sold out their Bonds. But, the Central Bank of Sri Lanka did the right opposite of that, i.e. to purchase Bonds," Wickremesinghe alleged.