Govt to implement modified inflation targeting framework

(COLOMBO, LANKAPUVATH) –Sri Lanka will soon commence a modified inflation targeting framework said Central Bank Governor Indrajit Coomaraswamy said.Speaking at the oration to mark the 68th anniversary of the Central Bank he said that this is expected to be implemented form 2019 April. He said that a legal frame work in this regard is now been prepared. The governor also said that the Employees Provident Fund (EPF) will enter the stock market soon.

“The fund has recently begun trading in the secondary government securities market,” he said.He added monetary authority has established sufficient safeguards to improve transparency and accountability in trading guidelines and improved fund management functions. The EPF withdrew from trading in the aftermath of investigations into the controversial bond trades in 2015 that sparked public outcry and the appointment of a Presidential Commission of Inquiry.

But, the EPF has already returned to trading on the secondary market, the Governor said adding that they are working towards EPF coming back to the stock market fairly soon once all the preparatory work is completed. “New investment and trading guidelines have been developed; surveillance system has been put in place. The segregation among front, middle and back offices has been made more entrenched,” he added. He assured there is a new auction system in place which works effectively.

Meanwhile former Deputy Governor Central bank Dr W A Wijewardena speaking at the 68th anniversary of the Central bank said that the present management of the Central Bank (CBSL) has resolved itself to adopting a flexible inflation targeting system and is now in the process of converting its policy architecture to facilitate its full implementation shortly. “This is a policy measure taken in the correct direction,” he said.

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