Dec 18, 2007 (LBO) – The International Monetary Fund has called for an independent governance structure for Sri Lanka’s Employees Provident Fund (EPF) amidst growing concern about real losses to the fund and its management at the hands of the Central Bank. In a Financial Sector Stability Assessment the IMF said a “sound, robust, and independent governance structure” was needed for the EPF with a “clear objective of seeking the best investment returns for members.”
Conflict of Interest
There is growing unhappiness at the real losses suffered by the Fund by its contributing members who are knowledgeable about real returns and the role played by the Central Bank in the losses.
Critics have pointed out that the Central Bank has a serious conflict of interest in getting reasonable returns to the members of the EPF who are made up of about two million private sector workers.
In addition to being the financial sector regulator, the central bank also runs the government’s debt office which has to get the lowest interest for the finance ministry.
The EPF on the other has an obligation to get the highest returns for its members.
Primary dealers of government securities say they are already berated by the public debt office when