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Minister suggests abolishing Policy Planning Division

by Asanga Warnakulasuriya

Minister of Rural Economy and Deputy Minister of Finance Bandula Gunawardena on Wednesday suggested the abolishing of the Policy Planning Division of the General Treasury (PPDGT). "This will be a crucial step in speeding up development," the minister said.

The Minister explaining his experiences in developing the Economic Centre at Dambulla, said negative attitudes of the PPDGT has always delayed development projects in Sri Lanka.

According to the Minister, the excuse of the PPDGT is that the projects did not come under the government's policy framework. Gunawardena stressed that only the Prime Minister and Ministers should decide on the government's policies and not the PPDGT.

PPDGT is only to guide the government in policy making, the minister said at the National Convention on Forward Markets held at Hotel Galadari yesterday to review the progress of the forward sales contracts (FSC) among the farmers in Sri Lanka.

The system was promoted by the Central Bank in 1999 under the promotional title "Govi Sahanaya". "Govi Sahanaya" is a legally binding agreement between the buyer and a seller.

Under this agreement, the seller agrees to sell a given quantity of agricultural produce of a specific quality on a given future date at a predetermined price.

This contract is attested by the bank which can offer credit to both parties.

The progress of the pilot project for promotion of forward sales contract was reviewed at the convention.

The project's objective was to promote FSC's among farmers and buyers to overcome problems faced by farmers due to price fluctuation. The project partners were led by Central Bank of Sri Lanka while Bank of Ceylon, People's Bank, Seylan Bank and Commercial Bank participated on behalf of the state. Private banks Ruhunu, Kandurata, Uva, Rajarata, Sabaragamuwa and Wayamba Development Banks also participated.

The Minister said Export Production Villages will be set up in Kelani Valley and Sithawake as people's companies. Initial steps for these villages will be taken by farmers followed by an exporter. Of the shares, 51 per cent will be owned by the exporter and the rest will be divided among farmers( 28 per cent), Ministry (16 per cent) and Export Development Board (five per cent).

"There are no plans of running these institutions as a part of government, and 49 per cent of the shares will soon be given to farmers making it a people's company," the minister added.

Central Bank of Sri Lanka (CBSL) Governor, A. S. Jayawardena, Deputy Governor (CBSL), P. M. Nahawatta and Co-Ordinator, Commodity Marketing, Risk Management and Finance, UNCTAD Lamon Rutten were also present.

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