Dr. Harsha de Silva's statement:

CB Governor brands allegations, a figment of imagination

Governor of the Central Bank of Sri Lanka, Ajith Nivard Cabraal yesterday denied allegations by UNP parliamentarian Dr. Harsha de Silva on British Defence Secretary Dr. Liam Fox who resigned from his post.

In response to Dr. De Silva's statement on Friday, the CB Governor said it was figment and the MP's fertile imagination. Cabraal said that the relationship that Dr Liam Fox had established with the Government and the Opposition dates back to the wellknown Liam Fox Agreement that was initiated between former President Chandrika Bandaranaike Kumaratunga and UNP Leader, Ranil Wickremasinghe. "Hence, Dr Fox's interest in Sri Lanka is not something new," he said.

Cabraal added that after terrorism in Sri Lanka was defeated and the focus was on development and reconciliation it was proposed at a discussion with Dr Fox that an independent Sri Lankan Development Fund be created with contributions from overseas Sri Lankans and other investors.

"Such a fund was considered a useful source of finance to support the rapid infrastructure development as well as the rehabilitation and reconciliation process in the Northern Province of Sri Lanka," he added.

In discussions with Dr Fox, the Sri Lankan authorities conveyed its keenness to closely engage foreign investors to rapidly develop the Northern Province after peace has been restored, so that new funds could also be quickly channeled for the reconstruction of the Northern and Eastern Provinces.

The discussions with Dr Fox took place in late 2009 and early 2010, to work out a suitable mechanism for the Sri Lanka Development Fund, and one of the operating instruments proposed for the fund was the formation of a Trust, to manage the Fund.

However, after the General Elections in UK in 2010, which led to Dr Liam Fox being appointed Defence Minister, the formation of the proposed Fund and Trust did not materialize, according to the Central Bank chief.