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‘Changing medication will not help unless we change the doctor to solve the country’s problems’ – Eran Wickramaratne, MP
MP Eran Wickramaratne speaking in the debate on the Central Bank of Sri Lanka (CBSL) annual report – 2020 in Parliament last week said that under this government, Sri Lanka is currently facing crises such as higher spending than revenue, higher import expenditure than exports indicating a deficit in the current account and widening budget deficit.
He said what needs to be done is to change the doctor rather than changing the medication to resolve these problems faced in the country.
He further said that the cost of living and the price of petrol have gone up and the country was facing huge problems. Even a school child realizes that government revenue has declined. Now 70% of government revenue is spent on interest on loan repayment. Lebanon is the only country in the world that pays higher interest than Sri Lanka as a percentage of national revenue.
Wickramaratne said that it was first thought that changing ministers was useless for this issue and the policies should be changed. But the Government ministers were saying that though the opposition was pinpointing the disease they did not propose any solution.
The solution to the problem in this country is to change the doctor. There is no point in changing the medication, he suggested.
Today Sri Lanka is facing a dual crises. One is that spending is higher than our national revenue. This is an average deficit of 7.6 per cent of GDP since 1990. Incomes began to fall since 1995. This problem has been exacerbated by the gradual decline in the country’s revenue from 17.3% to 11.6% of GDP from 2006 to 2014 under the Government of President Mahinda Rajapaksa.
“However, the previous government had set its sights on the increase of revenue in 2018. We then said that we should take a basic step to reduce the budget deficit and increase revenue. Accordingly, the good governance government was able to increase the revenue to 13.5% by 2018. But due to the 2018 coup, government revenue fell to 12.6 percent, Wickramaratne further said.
The second structural crisis is the deficit in the current account. Since 2000 exports revenue continue to decline as a percentage of GDP. As a result of these two issues, we have to borrow internationally and locally, he said.
Governments in our country have not addressed these fundamental issues. Even today this government does not seem to have focused on this need. If there is a change in policy, we look forward to hearing about that change in the next budget.
Minister Cabraal, who spoke today, for the first time in 2007 went to the international market as the Governor of the Central bank and obtained a $ 500 million ISB (International Sovereign Bond) loan to address the issues of the budget deficit.
Of course, he is now delivering sermons telling different stories that the government does not need international money. That was the first time Sri Lanka had obtained an ISB loan through Mr. Cabraal. The then government started borrowing in 2007 as a new source to cover the fiscal deficit. Since then, it has continued to borrow dollars at higher interest rates. This is the problem faced by this country now.
Under such a context who will come and invest in Sri Lanka? We borrowed and created white elephants. This Government during its previous regime launched projects such as Nelum Kuluna and Hambantota Conference Hall that do not directly benefit the people or the country. Implementing such projects making use of loans is not an appropriate decision. Bandaranaike Conference Hall is a gift from China.
Even in the future, if we take a loan, we should invest them in a project that would generate income for the masses and the country.
Everyone remembers that in the last quarter of 2018, the foreign reserves stood at $ 7.8 billion. But by the time of the 2018 coup, it was down by $ 1 billion. Sri Lankan rupee depreciated by 10 rupees. Although GDP was said to have declined during the previous government, the average growth rate remained at 4.3% until the third quarter of 2018. This government has lied that growth has slowed. This problem in this country arose because of the conspiracy that preceded the Easter attack.
The previous government introduced a modernized Finance Bill for national accounting. The accounting system was changed. The income from it gradually increased. Now it must be said that the Central Bank has done some mathematical gimmicks with its report.
The Central Bank report 2020 showed that expenditure has decreased in that year. The national accounting by the CBSL continues to be calculated on cash basis. CBSL has changed the accounting system into accrual basis in 2020 and though it showed that the budget deficit is 11 % by transferring the expenses of Rs 420 billion to previous year’s account. Actually the deficit is 14 % of GDP, the highest fiscal deficit recorded in this country in 38 years.
Another gimmick was to show that the total debt to GDP ratio by 2020 was 101%, but it is 109% when combined with loans obtained by state-owned enterprises separately. In addition, the Petroleum Corporation’s debt of Rs. 345 billion increased by 16% by 2020. In 2019 it went up from Rs 297 b to Rs 345 b while the world oil prices were low, while the country used less oil because of the lockdown. When the oil prices fell the government did not pass on the benefit to consumers.
There was a third gimmick in this report. Although it is said that our foreign borrowing has come down, this is really a numbered game. The value of international sovereign bonds is stated in market value, but it should have been stated based on the face value. The billion dollar ISB paid recently was also based on face value. Therefore, in order to know the true value of the loan, the face value of the loan must be stated. If the face value is mentioned, the amount of foreign loans will increase further.
Wickramratne urged not to use this numbered game if we are to create credibility and the confidence in investors and rating agencies when building a country. He also called on the members of the Monetary Board to protect the independence of the Central Bank.
News
Coal scam has become litmus test for NPP: FSP
The scam involving the import of substandard coal has become the litmus test for the NPP Government, says the Frontline Socialist Party.The substandard coal scam has become the litmus test for the NPP government’s integrity and transparency, Frontline Socialist Party (FSP) Education Secretary Pubudu Jayagoda said on Thursday, alleging serious irregularities and contradictions in the government’s handling of coal procurement for the Lakvijaya Power Plant.
Addressing the media in Colombo, Jayagoda strongly rejected recent statements made by Tilvin Silva, General Secretary of the JVP, during an interview with a state television channel on the ongoing coal tender controversy. He said several of Silva’s claims were factually incorrect and echoed earlier statements made by the Minister of Power and Energy that had already been abandoned after being proven false.
“There are serious inaccuracies in the views expressed by Tilvin Silva. Some of these false points were first raised by the Power Minister a week or two ago, but he stopped repeating them once we produced documentary evidence,” Jayagoda said, adding that the JVP General Secretary appeared to be “not up to date with the facts.”
Jayagoda rejected claims that coal had previously been purchased without calling for tenders from a politician’s company at inflated prices. He said that since the Lakvijaya Power Plant commenced operations in 2008, tenders had been called annually and contracts awarded to the lowest bidder.
He also dismissed assertions that no tenders were called in 2023. “The Power Minister initially made this claim, too, but stopped after we presented the tender advertisements,” Jayagoda said. He questioned contradictory statements made by government representatives, pointing out that while Silva claimed no tender was called in 2023, references to 2023 tender specifications had been publicly cited by Deputy Minister Kumara Jayakody.
“If no tender was called in 2023, how were tender specifications published that year?” Jayagoda asked, describing the claims as mutually contradictory.
According to Jayagoda, tenders were, indeed, called in 2023 and the contract was awarded to Coral Energy. When that company failed to supply coal on time, the supply responsibility was transferred to Black Sand. He further rejected claims that no tenders were called in 2024, explaining that during the bidding process a company named Potentia had offered a lower price than the initial lowest bidder.
“Based on approvals from the Technical Evaluation Committee, the Procurement Committee, the Cabinet, and finally the Attorney General, coal was purchased from the lowest bidder,” he said, adding that any doubts regarding the legality of the process could be investigated through proper legal channels.
However, Jayagoda stressed that the controversy was not merely about whether tenders were called, but about how the process was manipulated. He listed several concerns raised by the FSP from the outset, including a four-month delay in calling for tenders, changes to tender specifications, and the tender period being reduced by half.
“Urgency was cited as the justification for these changes, yet there was a six-week delay in awarding the tender. That clearly shows there was no real urgency,” he said.
Jayagoda also alleged that laboratory reports were concealed when substandard coal shipments were imported, in order to protect the supplying company. He said that despite a contractual clause requiring the tender to be cancelled if two shipments failed quality standards, the government continued with the order. He further accused the authorities of violating the agreement by approving emergency purchases in a way that benefited the supplier.
“The entire process is suspicious,” Jayagoda said. “A Minister will not resign unless they admit to fraud. But it is the responsibility of the President and the government to conduct an independent investigation, determine whether fraud has occurred, and remove the Minister if wrongdoing is established.”
He concluded by reiterating that the coal tender controversy would serve as a decisive test of the government’s commitment to accountability. “This is the litmus test for the integrity and transparency of the government,” Jayagoda said.
News
INS Gharial delivers 10 Bailey Bridges to Lanka
A consignment of 10 Bailey Bridges arrived in Colombo from Visakhapatnam aboard the Indian Navy ship INS Gharial and was formally handed over at a ceremony held on 05 February.The bridges were handed over by the Acting High Commissioner of India to Sri Lanka, Dr. Satyanjal Pandey, to Deputy Minister of Ports and Civil Aviation, Janitha Ruwan Kodithuwakku.
The additional Bailey Bridges have been provided under India’s grant assistance of USD 5 million for post-Cyclone Ditwah reconstruction, aimed at strengthening critical connectivity infrastructure in affected areas. Another consignment, carrying the remaining bridge components, is expected to arrive shortly.
The supply of Bailey Bridges forms part of India’s comprehensive USD 450 million Reconstruction and Rehabilitation Package announced by India’s External Affairs Minister, Dr. S. Jaishankar, during his visit to Sri Lanka, following Cyclone Ditwah.
The newly supplied bridges are to be installed at various locations across the country. Technical assessments for installation are being carried out by Indian Army engineers, in close coordination with the Sri Lankan Army and the Road Development Authority (RDA).
India has previously supplied four Bailey Bridges to Sri Lanka, two of which were installed in the Kilinochchi District and two along the Kandy–Ragala Road. These bridges have played a key role in restoring connectivity in difficult and hilly terrain, improving access for local communities and facilitating the resumption of essential services, livelihoods, and economic activity.
News
Anusha Palpita further remanded until 20 Feb.
Former Secretary to the Ministry of Mass Media and former Chairman of the Telecommunications Regulatory Commission of Sri Lanka (TRCSL), Anusha Palpita, was further remanded until 20 February by the Colombo Chief Magistrate’s Court.
The Court issued this order after considering the facts presented by the Bribery Commission and the attorneys representing the suspect.
Palpita was taken into custody and subsequently produced before the court on 23 January in connection with an investigation conducted, based on information received by the Bribery
Commission regarding the failure to disclose the source of assets amounting to Rs. 46 million, the Commission stated.
According to the Bribery Commission, Anusha Palpita arrived at the Commission on 23 January 23 was taken into custody after recording his initial statement.
The arrest was made on the charge of accumulating significant assets and property, exceeding his income, during a specific period, following an investigation into assets gathered beyond his legal earnings, within that time frame.
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