Drafting revisions to Monetary Law Act in final stages

The Central Bank (CB) says the drafting of revisions to the Monetary Law Act (MLA) is in the final stages.

Central Bank Governor Indrajit Coomaraswamy said that the Central Bank, assisted by legal experts from the International Monetary Fund (IMF), is in the final stages of drafting the revisions to the MLA, which will address long standing concerns, such as the focus on non-core and quasi-fiscal activities, monetary financing as well as limits to Central Bank autonomy by way of clearly demarcating the powers and functions related to monetary policy.

The approval of the Cabinet of Ministers has already been obtained in principle to introduce comprehensive amendments to the MLA, particularly in the areas of strengthening Central Bank independence.

In addition, under the MLA revisions the remit of price stability will be elevated to the status of the prime objective of the Central Bank.

The revised legislation will also facilitate institutional arrangements for setting inflation targets and improvements to monetary operations, as well as macroprudential tools. These legislative amendments would not only improve the overall focus of the mandate but would also boost the credibility of the Central Bank through an enhanced governance framework and autonomy as well as greater accountability and transparency of the Central Bank.

Coomaraswamy said that they expect to submit the amended MLA to the Cabinet of Ministers and Parliament for approval this year. (Colombo Gazette)