As enacted

Contents

Central Bank of Sri Lanka Act 2023 · As enacted · Part XIV · Relationship with the Parliament, the Government and the Public

86. Prohibition on monetary financing

Official English translation. The Sinhala text prevails. Open the official Sinhala text, official PDF on documents.gov.lk

(1)

The Central Bank shall not, directly or indirectly, grant credits to the Government or any public authority owned by the Government or to any other public entity.

(2)

The Central Bank shall not incur any cost on behalf of the Government, except for expenses related to the functions of the Central Bank under subsection (3) of section 113 of this Act.

(3)

The prohibition laid down in subsection (1) shall not apply to such Government-owned or publicly-owned banks and other financial institutions as may be determined by the

Governing Board.

(4)

The Central Bank shall not purchase securities issued by the Government, any Government-owned entity, or any other public entity in the primary market. The Central Bank may purchase such securities in the secondary market provided that such purchases do not circumvent the prohibition laid down in subsection (1).

(5)

Notwithstanding the provisions of subsections (1)

and (4), upon a Proclamation being made under the Public

Security Ordinance (Chapter 40) in the interests of the Public

Security and the preservation of public order, or a global health emergency that substantially and materially disrupts or constraints access by the Government to market funding, the Central Bank may purchase Treasury Bills in the primary market, where-

(a)

the Central Bank, in consultation with the Minister and subject to its monetary policy objectives under this Act, recommends the amount and terms of such

Treasury Bills to be purchased under this subsection;

(b)

Parliament approves every each recommendation;

and

(c)

upon the approval of Parliament, the Central Bank publishes in the Gazette the reasons for and, the amount and terms of such purchase of Treasury Bills:

Provided, however, the total amount of the purchase of Treasury Bills under this subsection shall-

(i)

not exceed five per centum of the limit of the

Treasury Bills approved by Parliament, applicable for the respective financial year;

(ii)

be at prevailing market interest rates;

(iii)

be on a temporary basis for a period not exceeding six month;

(iv)

be repaid immediately upon maturity, in cash only;

(v)

be of maturities not exceeding six months;

and

(vi)

not be rolled over or renewed.

Part XV

Credit Operations

Read on from Part XV

Part XVI

Financial Provisions

Read on from Part XVI

Part XVII

Internal and External Audits

Read on from Part XVII

Part XVIII

General Provisions

Read on from Part XVIII

Part XIX

Repeals and Savings

Read on from Part XIX