Cabraal issues clarification on strategy to release part of EPF balances to members

Monday, 6 April 2020 02:08 - - {{hitsCtrl.values.hits}}

Senior Advisor on Economic Affairs to the Prime Minister Ajith Nivard Cabraal yesterday issued the following clarification on his suggestion to release 20% of EPF balances direct to members

My suggestion regarding the release of 20% of the EPF balances (amounting to around Rs. 500 billion) from the fund of about Rs. 2,500 billion direct to the members themselves is a professional, technical and scientific proposal.

In that regard, I have set out the benefits that will accrue to the EPF members, the financial system and the Sri Lankan economy at the present time, if such suggestion is implemented.

During the period I served as the Governor of the Central Bank, from 2006 to 2014, the Sri Lankan economy was steered through many crises. In fact, it may be recalled that, it was during that period that we faced the Global Financial Crisis, the global recession, the global oil crisis and the global food shortage. In addition, Sri Lanka had to fight a terrorist war at home, and immediately thereafter, engage in a massive reconstruction effort.

Notwithstanding the above major challenges that had to be faced during that period, the Sri Lankan economy grew from $ 24 billion to $ 79 billion with an average growth of over 6% per annum. The Sri Lankan Rupee had its lowest ever average depreciation. Foreign reserves almost quadrupled. Poverty reduced substantially. Interest rates were brought down to sustainable single digits, and all businesses flourished. In addition, the financial system was stable, and not a single bank or registered financial institution was allowed to collapse.

Accordingly, it may have to be acknowledged (even grudgingly), that I may have some expertise, experience and knowledge in managing an economy in difficult times, and it was in that background, I believed that I had a duty to suggest way forward strategies to facilitate the revival of the Sri Lankan economy in the aftermath of COVID-19, as well. It was therefore in that context that I made the above suggestion (and I intend making more suggestions over the next few days).

In any event, I wish to reassure everyone that I would not be offended if my carefully considered but ‘out-of-the-box’ suggestions are not welcomed or implemented. Indeed, if others have better ideas and strategies to get the economy back on track and thereby ensure the continued wellbeing of our people and workforce, they are most welcome to implement such policies or strategies.