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AKD’s fixation on assets vs. liabilities:

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An Open Letter to Dr R. H. S.Samaratunga former Secretary, Ministry of Finance

Dear Dr. Samaratunga,

I am addressing this letter to you because you were the Secretary to the Ministry of Finance when the item ‘non-financial assets’ was added in 2015 to the ‘Statement of Financial Position’ in the Finance Ministry’s annual reports. Up to that time, only financial assets had been accounted for in the Statement of Financial Position.

In normal circumstances, a change as esoteric as that would have gone completely unnoticed by the general public. However in February 2018, the then Auditor General Gamini Wjesinghe stated at a press conference held to introduce his report on ‘Public Debt Management’ that while the Finance Ministry records a total national debt of Rs. 8.8 trillion as at the end of 2016, the assets base is indicated as just Rs. 1.1 trillion. From that point onwards, the JVP started using these figures in political campaigns to bolster their claims of massive corruption on the part of successive governments.

Speaking in Los Angeles this year, Anura Kumara Dissanayake (AKD) stated that various governments had taken project loans amounting to Rs. eight trillion but that there were assets worth only two trillion. (He was obviously using the figures in the Finance Ministry’s 2022 Statement of Financial Position.) On this basis AKD stated that over 75% of the project funds had been stolen and that all the projects had been built with just 25% of the funds borrowed. He repeatedly mentioned this apparent disparity between liabilities and assets even during his recent interview on Derana TV. This has become a fundamental part of the JVPs political campaign in the presidential election.

When the finance ministry first started including non-financial assets in the Statement of Financial Position in 2015 under your watch, the total value of non-financial assets was given as Rs. 21.2 billion. By the time Auditor General Gamini Wijesinghe spoke about this matter in 2018, the value of non-financial assets in the Statement of Financial Position had gone up to just over Rs. one trillion. In the latest available (2022) Statement of Financial Position, the total value of non-financial assets is given as just over Rs. two trillion.

The note on ‘government borrowings’ in the finance ministry’s Statement of Financial Position also seems to have become more detailed during the period after 2015. Even though the 2015 Statement of Financial Position (or those that preceded it) did not indicate ‘foreign project loans’ separately in the breakdown of government borrowings, in the Statement of Financial Position, we begin to see foreign borrowings for projects featuring in the breakdown of government borrowings from 2017 onwards. Thus in the latest available (2022) Statement of Financial Position we see over Rs. 7.6 trillion (which can be rounded off to 8 trillion as AKD has obviously done) listed as foreign loans for projects in the note on government borrowings.

The Rs. two trillion worth of non-financial assets mentioned in the 2022 Statement of Financial Position are not just the assets built with foreign project loans but ALL the non-financial assets of the Republic of Sri Lanka. If the value of any assets built with foreign loans has been included at all under the rubric of non-financial assets in the 2022 Statement of Financial Position, it will be only a miniscule proportion of the total amount mentioned. When AKD realises this, he may start claiming that 99% of the foreign project funds had been stolen and that the all projects had been built with just 1% of the amount borrowed!

We can arrive at an understanding of what is expected by the inclusion of ‘non-financial assets’ in the financial statements of the Ministry of Finance by perusing the IMF’s Government Finance Statistics Manual of 2014. According to the IMF manual, the non-financial assets of a nation state are made up of ‘produced assets’ which include all fixed assets, inventories and valuables, and ‘non-produced assets’ such as land and natural resources. Thus in order to have a proper valuation of the non-financial assets of a nation state, all the land, buildings, streets, highways, lighting systems, bridges, communication networks, canals, and heritage assets, such as Sigiriya, and the Ruwanweliseya, which are assets that ‘a government intends to preserve indefinitely because they have unique historic, cultural, educational, artistic, or architectural significance’ will have to be included under non-financial assets.

King Sri Wickrema Rajasingha’s throne in the museum, all Dutch coins and the paintings at President’s house will have to be included under ‘valuables’ and under natural resources will have to be included items such as the value of the electromagnetic spectrum, the natural resources in the sea within Sri Lanka’s exclusive economic zone, the value of the graphite, phosphate, gem and mineral sands deposits in Sri Lanka etc. Any sensible person will see that the task of having a proper valuation of the non-financial assets of a nation state to be included in the Statement of Financial Position is a task like trying to empty the Beira Lake with a tea cup.

Furthermore, the IMF’s Government Finance Statistics Manual of 2014 stipulates that non-financial assets should be valued at current market prices. If anyone is wondering how heritage assets like the Dalada Maligawa or the Munneswaram Kovil are to be valued at current market prices, the IMF manual has an answer – “When there are no observable prices because the items in question have not been purchased or sold on the market in the recent past, an attempt has to be made to estimate what the prices would be were the assets to be acquired on the market on the date to which the balance sheet relates.”

For officials of the Finance Ministry or qualified valuers to spend time on such an exercise is nothing short of insanity. Furthermore, Sri Lanka is a country where many government entities have not presented their annual reports to Parliament for years. To expect such a country to have the current market prices of the sum total of non-financial assets of the nation stated accurately in the annual Statement of Financial Position is something that is not going to happen in this century or the next.

The compilers of the IMF’s Government Finance Statistics Manual of 2014 knew that what they were trying to promote was a tall order. They observed that “It is recognized that the implementation of the fully integrated GFS (government finance statistics) framework presented in this Manual will take some time”. And further that – “A more difficult step is likely to be the collection of a complete set of information about the stock positions of non-financial assets held at a given time and their valuation at current market prices”. Such admissions can qualify as the understatements of the 21st century.

The head of the National Accounts Division of the OECD observed in 2017 that the measurement of non-financial assets is one of the most problematic areas in national accounts and that only a few countries like Australia and France have a fairly complete set of balance sheets, although their statistics also contain information gaps. Accurately accounting for non-financial assets in the statement of Financial Position is not a tall order only for Sri Lanka but for almost all countries in the world. Nobody living today, in any country will be able to use the item ‘non-financial assets’ in the balance sheets of nation states in any meaningful way in macroeconomic analysis during their lifetimes.

Our Ministry of Finance would have known that this was a ‘mission impossible’ when the item non-financial assets was included in the Statement of Financial Position. Then, why did they embark on an exercise akin to trying to empty the Beira Lake with a tea cup? Did the IMF or some other important international body insist that non-financial assets be included in the financial statements? Or did the pressure come from a local entity like the Auditor General’s Dept.? Either way, why did the finance ministry succumb to such pressure and take on a task that can never be fulfilled and waste time, money and resources in reporting useless data that cannot, and will never be used in any kind of macroeconomic analysis?

The amounts mentioned as the value of ‘non-financial assets’ in Sri Lanka’s Statement of Financial Position are unusable on account of being incomplete. Note 17 in the 2022 Statement of Financial Position has given the breakdown of non-financial assets as follows – buildings, machinery, land, biological assets, intangible assets, work in progress, and leases. The amount stated as the total value of the buildings of the Republic in 2022 is just over Rs. 375 billion. When that is translated into US Dollars at the 2022 exchange rate, the total value of the buildings of the Republic becomes 1.15 billion USD – roughly the amount that the government got as an upfront payment for the lease of the Hambantota Harbour in 2017.

The Finance Ministry may be making valiant efforts to account for all the non-financial assets of the Republic the way a madman would frantically try to empty the Beira Lake with a tea cup, but they are not likely to get anywhere with regard to this matter in this birth or the next. The item ‘non-financial assets’ in the Statement of Financial Position will perpetually be a work in progress serving no useful purpose. Nearly a decade after this item was introduced to the financial statements of the Finance Ministry, only the JVP has found a use – albeit a political one – for this data on non-financial assets produced in the Finance Ministry’s Statement of Financial Position.

When a Statement of Financial Position with a glaringly understated accounting of non-financial assets goes to the Auditor General’s Department which will be full of those from accounting and book-keeping backgrounds, questions will be raised about the lack of assets when compared to liabilities. The Auditor General’s 2018 report on Public Debt Management has stated the obvious in saying that the reason for the lack of non-financial assets in the Finance Ministry’s Statement of Financial Position is due to the failure to correctly identify and account for the assets that should be included under that item.

So long as the Ministry of Finance continues to have non-financial assets as an item in their Statement of Financial Position, the Auditor General’s Department will have no option but to continue to find fault with the Ministry of Finance for failing to ‘identify and account for’ the assets that should be included in the Statement of Financial Position. The people of this country will be able to live with that just as they have learnt to live with the fact that most government owned entities fail to present their annual reports to Parliament on time. What will be more difficult to live with will be how the figures for non-financial assets mentioned in the Finance Ministry’s Statement of Financial Position is understood by some politicians.

Today, AKD states that project loans taken amount to Rs. 8 trillion while the assets built with those loans amount to only Rs. 2 trillion. As I said earlier, when he realizes that the Rs. two trillion in non-financial assets mentioned in the 2022 Statement of Financial Position refers to all the assets of the Republic and not just the assets built with foreign loans, he may start saying that 99% of all foreign project loans had been stolen and that the projects had been built with just 1% of the borrowed funds.

If the result of the presidential election goes the wrong way, some very unpleasant things could happen in a quest to recover the money deemed to have been ‘stolen’ from foreign borrowings for projects. Since the starting point of all this was the inclusion of the item ‘non-financial assets’ in the Finance Ministry’s Statement of Financial Position in 2015, when you, Dr. Samaratunga, held the position of Secretary to the Ministry of Finance, you should come forward and explain matters to the public.

There are thousands of economists, accountants, civil servants, business executives, financial analysts, academics and the like in this country. Yet the only group of people in Sri Lanka who have found some use for the figures on non-financial assets reported in the Finance Ministry’s Statement of Financial Position is the JVP which has a history of doing very unpleasant things on the basis of their understanding of the world. Hence I earnestly request you to explain this issue of non-financial assets reported in the Finance Ministry’s Statement of Financial Position to the public as it is now no longer just an item included in the financial statements of the Finance Ministry but quite literally a matter of life and death for many people.

Yours sincerely
C. A. Chandraprema



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From stabilisation to transformation without delay

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At a symposium on reconciliation organised by the National Peace Council last week, more than 250 religious clergy, civic activists and political representatives from different communities gathered to discuss the country’s future. Speaking at the event, Minister Bimal Rathnayake explained the government’s approach to national reconciliation. He said the government viewed the country’s recovery in terms of a three stage process. The first stage was stabilisation, the second was development and the third was transformation. Reconciliation, he implied, would come in that final stage. The participation of Opposition Leader Sajith Premadasa at the same symposium, and the constructive nature of his comments, strengthens that hope.

When the present NPP government took office in 2024, the country was emerging from one of the gravest crises in its post Independence history. The economic collapse of 2022 had led to shortages of fuel, food, medicines and electricity. Inflation soared, foreign reserves disappeared and long queues became part of daily life. The political upheaval that followed culminated in the resignation of former President Gotabaya Rajapaksa after mass public protests under the banner of the Aragalaya movement. The country was then governed by a leadership that spoke the language of reform and reconciliation but was widely perceived as lacking a direct popular mandate.

Sri Lanka’s past experience suggests that stabilisation and transformation cannot be treated as entirely separate stages. Postponing reconciliation until some future moment risks repeating the failures of the past. If transformation is endlessly delayed until a supposedly perfect moment arrives, there will always be new crises and new reasons for postponement. Minister Rathnayake’s contention that the government’s immediate priority has necessarily been stabilisation flows from the government’s awareness of the precarious situation the country is. Over the past two years, the government has succeeded to a significant extent in restoring economic and political stability. Inflation has reduced, shortages have ended and public institutions have regained a degree of functionality.

Guaranteed Changes

On the other hand, the country’s development continues to face challenges due to adverse global conditions, including disruptions caused by conflict in the Middle East and extreme weather events that have affected tourism, trade and the cost of living. The danger is that reconciliation may be indefinitely postponed in the name of stabilisation. This danger can be reduced if the government works proactively with the opposition and civil society to commence practical measures of transformation now rather than later. The participation of Opposition Leader Sajith Premadasa at the symposium, and the constructive nature of his comments, has strengthened the sense that bipartisan engagement on reconciliation may now be possible.

The urgency of transformation came through strongly in the presentations made by representatives of the Sri Lanka Tamil and Malaiyaha Tamil communities. ITAK parliamentarian S.Shritharan spoke of the frustration caused by unresolved post war issues in the north and east. He referred to disputes regarding land occupied during the war years, including controversies linked to Buddhist temples and state sponsored settlement activity in areas claimed by local communities. He also pointed to the continuing large scale presence of the security forces in the north and east nearly two decades after the end of the war. These grievances have remained central to Tamil political discourse since the end of the armed conflict in 2009. Families displaced by war continue to seek the return of ancestral lands. Civil society organisations in the north have repeatedly called for greater civilian control over local administration and a reduction in military involvement in civilian life.

Academic research and practical work on the ground have shown that reconciliation cannot be separated from questions of dignity, equality and justice. Former minister Mano Ganesan, leader of the Democratic People’s Front, focused on the longstanding problems faced by the Malaiyaha Tamil community. He spoke passionately about continuing housing shortages, landlessness and economic marginalisation, issues that have persisted since Independence. He also highlighted the devastating impact of recent extreme weather events on estate communities that remain socially and economically vulnerable. The condition of the Malaiyaha Tamil community remains one of the enduring social justice issues in Sri Lanka.

After Independence in 1948, a large proportion of them were denied citizenship and voting rights through legislation that rendered them stateless. Though citizenship rights were eventually restored, the social and economic consequences of exclusion continue to be felt generations later.

Many families still lack secure housing and land ownership despite their immense contribution to the country’s plantation economy. Minister Rathnayake’s responses to both these concerns were politically significant. He argued that recent political developments, including the declining influence of narrow ethnic politics across communities, indicated a major shift in public attitudes. According to him, the political ground has changed in ways that make it increasingly difficult for politicians who rely primarily on ethnic division and communal insecurity to retain public support.

Inter-Connected

There is evidence to support the assessment about the changing political grounding which sees future prospects in the resolution of long standing problems. . The economic collapse of 2022 affected all communities alike and generated a new politics centred on governance, anti corruption, accountability and economic justice. The Aragalaya protests brought together Sinhalese, Tamils and Muslims in a common demand for political change. Although ethnic grievances have not disappeared, the crisis created space for a broader understanding that the country’s future depends on cooperation rather than division. Opposition Leader Premadasa’s comments at the symposium reflected this changing political climate. He emphasised that national reconciliation could not be separated from economic justice and the need to address disparities between regions and social classes.v He also mentioned the need for civil society organisations to take this message to the community. This wider understanding of reconciliation is important because ethnic inequality and economic inequality have often reinforced each other in Sri Lanka’s history.

Academic studies have identified the denial of citizenship rights after Independence as a historic injustice that set back the Malaiyaha community for decades. The challenge now is to ensure that transformation becomes part of the stabilisation and development process itself. Practical first steps are both possible and necessary. The release of civilian lands still under state control, greater devolution of administrative authority, reduction of military involvement in civilian affairs, language equality in public administration and accelerated housing and land ownership programmes in the plantation sector are all measures that can begin immediately without waiting for a final stage of transformation.

The government’s recent commitment that provincial council elections will finally be held this year is therefore significant. These elections have been repeatedly postponed by successive governments. Holding them would not solve the ethnic conflict by itself. But it would signal a willingness to restore democratic institutions and share power in a meaningful way.

Sri Lanka has repeatedly postponed difficult reforms in the hope that a more convenient political moment would eventually arrive. But opportunities are invariably created and fought for instead of being provided as a gift by a benevolent government.

The present moment, shaped by the economic crisis and public demand for accountable government, offers a rare opportunity to move simultaneously towards stability, development and reconciliation. Provincial council elections can be the first meaningful step. But they must not be the last.

by Jehan Perera

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Researchers to shape new environmental policy framework

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Some of the researchers at the meeting

In a significant move aimed at steering Sri Lanka’s environmental governance towards a more science-based and evidence-driven path, the Ministry of Environment has initiated a new collaborative mechanism to integrate leading researchers into national policy formulation and conservation planning.

The initiative was discussed at a high-level meeting chaired by Dr. Dammika Patabendi at the Ministry of Environment on Tuesday, where top environmental scientists, wildlife experts and researchers were invited to contribute towards what officials described as a “strategic transition” in the country’s environmental management framework.

The discussions focused on strengthening the scientific basis of environmental conservation programmes and national policy decisions while creating a more research-friendly environment for academics and field scientists engaged in biodiversity and ecological studies.

Particular attention was paid to long-standing concerns raised by researchers regarding procedural and operational difficulties encountered when conducting studies in collaboration with the Department of Wildlife Conservation and the Forest Department.

Minister Patabendi stressed the need for environmental policies to be guided by credible scientific data rather than ad hoc administrative decisions, ministry sources said.

Among the key proposals discussed was the establishment of a streamlined mechanism that would reduce bureaucratic obstacles faced by researchers in obtaining approvals, accessing field sites and sharing scientific findings with state institutions.

The Minister highlighted the importance of building stronger partnerships between policymakers and the scientific community at a time when Sri Lanka is grappling with escalating environmental challenges including deforestation, biodiversity loss, human-elephant conflict, climate-related disasters and ecosystem degradation.

Environmentalists attending the meeting had also highlighted the urgent necessity of incorporating empirical research into national decision-making processes to ensure long-term ecological sustainability and better resource management.

The meeting brought together several of Sri Lanka’s leading environmental researchers and academics including Rohan Pethiyagoda, Saminda Fernando, Sewwandi Jayakody, Samantha Gunasekara, Dinidu Devapura, Himesh Jayasinghe, Manoj Prasanna, Mendis Wickramasinghe and Suranjan Karunarathna.

Director General of Wildlife Conservation Ranjan Marasinghe also participated in the deliberations.

Officials said the proposed framework is expected to pave the way for a more transparent, data-oriented and scientifically credible environmental governance structure capable of addressing emerging conservation challenges more effectively.

The government expects the new mechanism to support the implementation of practical and scientifically robust programmes aimed at safeguarding Sri Lanka’s ecological future while enhancing cooperation between state agencies and the country’s growing community of environmental researchers.

 

By Ifham Nizam

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Back home … for a special occasion

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Seven Notes: Sri Lankans based in Dubai – with Niluk (second from left)

Niluk Uswaththa, of Seven Notes fame, based in Dubai, surprised many when he and his wife Apeksha, turned up in Colombo, last week … unannounced.

Yes, they had a purpose in their surprise visit … to wish Apeksha’s mum for her birthday, which was on Monday, 18th May, and what a surprise it turned out to be!

In an exclusive chit-chat with The Island, Niluk said that the scene in Dubai is improving and Seven Notes do have work coming their way.

Since the members of Seven Notes are all employed (doing day jobs), they operate only on Saturdays and Sundays.

Niluk: Didn’t come prepared to perform, but obliged
friends in Galle

In fact, to get to Colombo for the birthday surprise (on Monday, 18th May), the band had to skip their 17th May, Sunday gig.

“Although it’s a short vacation, my wife and I are enjoying the setup here,” said Niluk, adding that they spent two days in Galle and that their next destination is Anuradhapura.”

Niluk didn’t come prepared to perform, but he obliged the crowd present, at a friend’s birthday celebrations, in Galle, singing and playing guitar.

They are scheduled to leave for their home, in Dubai, in the first week of June.

Seven Notes is an outfit made up of Sri Lankans and the band has been around for almost nine years.

Niluk came into their scene nearly seven years ago.

“When I went to Dubai, I had offers coming my way but it was Seven Notes that impressed me because of their acoustic style.”

The Dubai’s entertainment scene is showing clear signs of bouncing back and even levelling up in the next few months.

Niluk and Apeksha: Enjoying their short vacation

After a slowdown earlier this year due to regional tensions, shows and festivals are back on the calendar, and organisers say late 2026 could be the busiest concert season in years.

Time Out Dubai says “the 2026 concert calendar is filling up nicely” and “the city is ready to party once again” after some reschedules.

Dubai Summer Surprises in July brings retail activations, comedy nights, and indoor art exhibitions.

Organisers point to a backlog of postponed events that are being rescheduled for late 2026 and early 2027.

Yes, Dubai is calm on the surface but on alert. Life is mostly normal in the city, but there’s a “balancing act” as people watch for escalation.

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