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| Sunday, 25 August 2002 |
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Fast-tracking financial sector reforms by SUREKHA GALAGODA Important and far sighted changes to the financial system are being considered by the Financial Sector Reforms Committee (FSRC) established on the initiative of Prime Minister Ranil Wickremesinghe. The Government is fast-tracking the financial sector reforms for an effectively functioning financial system to achieve sustainable economic growth and macro-economic stability. Liberalising and further de-regulating existing controls and restrictions under existing legislation, introducing new legislation and enacting or amending existing legislation are the main methods by which the reforms are expected to fast-track. Necessary financial sector reforms had been identified by several previous workshops, but were not systematically implemented. Two significant recent studies, the seminar on 'Financial reforms key to economic growth' and the Prime Ministerial Task Force Report on Financial Reforms, paved the way for establishing the FSRC. The three-day conference on financial reforms highlighted the need for urgent reforms in the existing financial set-up, the legal architecture, the regulatory framework, the current institutional structure and the incentives to innovate and develop new financial products. The vision of the Prime Ministerial Task Force was to develop a framework for an innovative and flexible financial system to face the challenges of globalisation, ensure that all participants see an economic benefit and have access to a choice of financial instruments with diverse risk return opportunities and transforming Sri Lanka into a financial hub by encouraging foreign financial intermediaries to use the country as their South Asian base. The FSRC is supported by nine subcommittees, who are required to examine and recommend reforms within tight deadlines in the following areas: Subcommittee responsibilities * Financial sector legal reforms * Reforming the Central Bank of Sri Lanka * Government finance and public debt management * State bank reforms * Money and capital market reforms * Efficient payment and settlement system * Reforms to exchange regulations * Superannuation reforms * Public Awareness Dr Wickrema Weerasooria has been appointed Consultant, Financial Sector Legal Reforms by the Central Bank of Sri Lanka to independently examine all existing financial and banking sector law and prepare and draft new legislation to have the flexibility to respond to the new challenges of globalisation. Dr. Weerasooria has written to key financial institutions in the country to make their submissions on what areas need to be reformed, relaxed and liberalised. The reforms are carried out in a transparent manner in consultation with the stakeholders. Some of the reforms being considered by the FSRC are relaxation of exchange control of capital account transactions, amendments to the Banking Act and Monetary Law Act, establishing an independent Government Debt Office, strengthening bank supervision, formulating and publishing a Code of Ethics and Standards of Professional Conduct for all professional and industrial associations, development of debt instruments and the creation of a longer term yield curve. Demutualisation of operations and broadbasing the ownership of the Colombo Stock Exchange (CSE) by listing or providing for adequate representation of market participants in the CSE ownership structure is also expected. Draft legislation is already with the legal draftsman to amend the Finance Leasing Act of 2000 to facilitate leasing companies to carry out securitisation of lease receivables, which is expected to bring substantial benefits to the transport sector. The meetings of the FSRC are chaired by Central Bank Governor A.S. Jayawardena and attended by Adviser to the Prime Minister R. Paskaralingam. The Prime Ministerial Task Force comprise Ravi Abeysuriya, Anil Amarasuriya, Ananda Atukorala, Nihal Fonseka, Amitha Gooneratne, Ajit Gunewardene, Kapila Jayawardena, Hiran Mendis and members of the Ceylon Chamber of Commerce, Chandra Jayaratne, Deva Rodrigo. |
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