The Hon. Ravi Karunanayake

¶ 01 Hon. Presiding Member, the key matter today is the regulation under the Central Bank Act: the conversion period for export proceeds, previously reduced from 6 months to 3 months, is now reduced to 1 month.

¶ 02 After the IMF’s 5th and 6th reviews and tranche disbursements, they state recovery is underway but too slow; they also call to revisit the PAYE threshold—the current Rs. 1.5 million per annum is too low and should be reviewed—and to broaden the tax base without relying overly on motor vehicle duties. We warned 18 months ago that these issues were coming.

¶ 03 They also call for stronger financial sector supervision—NDB’s incident highlighted this. When we raised this with the CBSL Governor, it was brushed aside. But when the “white man” says it, it is taken seriously—this is the backdrop.

¶ 04 We are borrowing USD 2,900 million from the IMF at 5% interest. Over the eight-year period, interest totals about USD 870 million; in all, USD 3,770 million will be repaid—principal plus interest. Within this context, what are we doing?

¶ 05 In COPF, we consider matters from the country’s perspective. The Central Bank claims not to print money and that finances are adequate; then why is the rupee depreciating? The rupee’s fall is your core problem.

¶ 06 In electricity, due to technical defects at Norochcholai, we face costs between Rs. 30–100 billion. When we opened imports, we said: focus not on 50,000–60,000 cars, but on safeguarding the future of 22 million people. The dollar was Rs. 293; now it is Rs. 338—yesterday Rs. 342; two weeks ago, Rs. 351. We cautioned: instead of immediate gratification from imports, strengthen the rupee by boosting exports; then import sustainably. The Central Bank must shoulder its mandate; our issue is not with the Governor personally, but with the governance of the Central Bank. If we do not stabilize, in two months the dollar will be Rs. 350–370.

¶ 07 Export measures taken now—cutting 90 to 30 days—reflect a lack of new investments and slowing tourism and exports, leaving us reliant on remittances. We urge everyone to send every dollar home.

¶ 08 Note: under the Public Financial Management Act, every 1% increase in interest rates cuts fiscal space by about Rs. 350 billion. If Minister Bimal Rathnayake needs Rs. 112 billion to build a road, these interest hikes would fund three such roads instead. The Governor’s failure to control inflation and the exchange rate raises borrowing costs and squeezes the Budget; the public ultimately pays.

¶ 09 We face high inflation, a weakening rupee, and low growth—IMF says 3%, we think 2–4%—risking stagflation and reduced financial inflows while exports fall. This is data-driven, not mere Opposition rhetoric. Do not privatize losses by gifting assets like SriLankan Airlines to cronies. Moving money from one domestic pocket to another solves nothing; inequality is worsening.

¶ 10 The Central Bank and Finance Ministry must manage the exchange rate and reserves responsibly. Close ineffective entities like the Import and Export Control Department and reform investment boards and zones to deliver results.

¶ 11 [Intervention by Chair on time.]

¶ 12 To conclude: the rupee moved from Rs. 303 (3 March) to Rs. 313 (15 March), then to Rs. 340; later briefly to Rs. 332; after rate hikes, back to Rs. 348. Is the Central Bank running a bourse? Total debt is rising; layered taxes—especially on entrepôt trading—are harming competitiveness; loan-to-value constraints and mere “moral suasion” have failed, leading to blunt interest rate hikes that cost the Budget about Rs. 340 billion annually. If the Iran–US tensions extend for months and exports fall, how will 90-day—or now 30-day—conversion targets bring in dollars? Then you will halt LCs, and the rupee will fall further.

¶ 13 In September 2023, reserves were USD 6,100 million; now USD 6,780 million. Yet despite a positive BoP then, the rupee has weakened from Rs. 293 to around Rs. 341, and inflation moved from -1.2% (deflation) to about 5.7%. The Central Bank’s actions are central to these outcomes. Therefore, we request appointing a Special Committee on the Central Bank. I table two related documents.

¶ 14 Thank you.

¶ 15 Documents laid on the Table; to be placed in the Library.