Repo Agreement illegal unless approved by Parliament

By Yohan Perera   

Parliament approval is vital if the government is to go ahead with a Repo agreement with the Reserve Bank of America, UNP Deputy General Secretary Ruwan Wijewardene said yesterday. 

 “Government must come to Parliament and make provisions for the repurchase agreement (Repo). This will provide them with the opportunity to explain to the country the need for such an arrangement. Until then this agreement is illegal,” he said. “The Central Bank’s recent communique confirms what we have been saying, that the government is planning on entering into a repo agreement with the Reserve Bank of America. The “Economy Next” article on July 6 refers to the Treasury Secretary saying Sri Lankan assets would be pledged in support of the US$1 billion repurchase agreement with the US.”   Mr. Wijewardene said the government needs to clarify what these assets are and the price at which Sri Lanka hoped to repurchase these securities?   

“How does a country with foreign exchange shortfall of US$7 billion repay more than US$1 billion to recover the pledged US securities? In such a scenario the possibility of a default is extremely high, with the country facing the likelihood of losing ownership of the assets pledged in this agreement. The government must clarify this situation as well. Under our Constitution Parliament is vested with the control of public finances and the monetary law does not make specific arrangements for this repurchase agreement,” he said.