Emergency Bill - Stabilization of the Sri Lankan Economy

Main Submitter: Governor of the Central Bank

Co-submitter(s): Trade & Commerce, Finance Minister, SLFP Representative

1. Authorizes the following Central Bank Actions, effective immediately:

a. Tightening the monetary policy by hiking up the Central Bank interest rates from
7% to 14% to incentivize saving, with loan concessions for Indian SOEs and
certain NGOs to be negotiated with Indian officials
b. Preventing the depreciation of the Sri Lankan Rupee and improving trust in the
Central Bank by stabilizing the dwindling Foreign Reserves and fixing the
current floating exchange. This will be achieved by tying the SLR to the Gold
Reserves for at least the next 2 semesters, and moreover emphasizing the need to
recover said Reserves to 2015 levels (one of the highest and most stable in our
history)
c. Creation of an indefinite-term project as part of the existing Open Market
Operations to restructure the securities held and bonds issued by the Central
Bank under the working name Securities and Stability Framework (SSF) and
securities issued not before Q4 2022
d. Begin a program for the rebasing of National accounts using 2015 as base year, a
soft reset to the economic record to enable sustainable development of the Sri
Lankan economy with pre-COVID and pre-downturn objectives, further setting a
national target of 8% quarter-over-quarter inflation (currently ~16%)
2. Authorizes the finance minister to regulate budget, fiscal planning will be used to
reallocate resources to their most profitable uses which means that more profitable
industries such as agriculture and tourism will receive a higher budget whereas less
profitable industries such as will have their budget cut and this will lead to a more
efficient path to economic stability
3. Recommends seeking investment from India in light of recent developments to
incentivize FDI and improve current account in order to avoid dual-deficit of our fiscal
default and current account debt such that we are able to pay back India for their LoC.
Further, bilateral ties with India and Indian companies such as Bharat Petroleum should
be established to enable and facilitate the development of Sri Lanka’s secondary
industries and improve the standard of living of the Sri Lankan people
4. Establishment of the Board for the Investigation of Financial Crimes (BIFC) as a joint
venture between the Foreign Ministry, Central Bank, National Security Agency and Civil
Justice Ministry to investigate embezzlement cases related to China to improve relations
between the two states
5. Emphasizes the importance of maintaining progressive income tax so as to redistribute
wealth in Sri Lanka and continue to improve economic equality in Sri Lanka, which is
currently average (GINI of 51.0 out of 100)
6. Provides Mahinda Amaraweera with enough budget to purchase chemical fertilizers,
namely through:
 a. Usage of subsidies of 609.4 billion rupees from the GOI, for the purchase of
NPK based fertilizers,
b. Additional subsidies of 2501 rupees per 50 kg bag of nutrient diammonium
phosphate, to retain the price at 1350 SLR in local markets,
7. The Ministry of Trade and Commerce will work towards further Industrial development
of Sri Lanka in accordance with Central Bank/Finance Ministry targets and the UN
Sustainable Development Goals:
a. Funding new public works on roads and construction totalling no more than $1
billion including foreign funds
b. Aim to eradicate homelessness in urban regions of Sri Lanka by 2030
c. Develop heavy industry in collaboration with Tata Steel (in exchange of mining
rights) and Bharat Petroleum (in exchange for government contracts)
d. The minister for Public Utilities pledges to support a full electrification campaign
in Sri Lanka by 2030
8. Encourages the immediate establishment of an open line of communication between Sri
Lanka and India to discuss the use of the US$1 bn LoC as well as Foreign Direct
Investment from India to Sri Lanka, with the Central Bank governor, Finance Minister,
and SLFP President representing Sri Lanka
9. Endorses the establishment of initiatives towards small businesses and NGOs working
towards the betterment of slums in Sri Lanka, including but not limited microloans at low
interest and impact loans
10. Recognizes the dire and preventable economic strife of many slums in Sri Lanka and
therefore encourages targeted assistance in the following slums:
a. Mullaitivu
b. Mannar
c. Kilinochi District
d. Batticaloa district
e. Monaragala district
f. Kurunegala
g. Ratnapura
h. Kandy
i. Gampaha
j. Nuwara Eliya
k. Ratnapura
11. Encourages collaboration with NGOs that focus on rehabilitating housing, medicine and
food, including but not limited to: Habitat for Humanity, Sarvodaya, Shade and LRWHF.