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Eran takes govt. to task for errant policies



By Saman Indrajith

Samagi Jana Balavegaya MP Eran Wickramaratne warned in Parliament Thursday that Sri Lanka should prepare for its worst budget deficit in 35 years and the situation, which he said was due to the policy errors of the government.

 “Expenditure increases during a health crisis but that is not what has happened. Capital expenditure came down during this period. The crisis has occurred due to the collapse in government revenue. This is the policy errors, which, he said, had to be rectified urgently. He was taking part in the debate on six notifications under the Ports and Airports Development Levy Act, three Orders under the Customs Ordinance and six Orders under the Revenue Protection Act presented to the House for approval by the government.

Wickramaratne said that under the previous government, Sri Lanka had achieved and improved fiscal position after several years with the budget deficit kept at 5.3 per cent of GDP during that period.

“This however began to deteriorate by the end of 2019 because of the government‘s irresponsible statement, in the run up to the election, on taxes and while the fiscal position has deteriorated, the situation has got progressively worse in 2020.

“Government revenue has declined by 28 per cent compared to 2019. Recurrent expenditure has increased by l0 per cent. The budget deficit has increased by 41 per cent. Development spending that is capital expenditure has decreased by -1.1 per cent. And the government debt has increased by Rs. 1.020 billion in just six months rising from 13,000 billion to over 14.000 billion from January to June in 2020.”

MP Wickramaratne said that the fiscal results would get worse as the year progressed with an additional cost of a 10 per cent increase in the government staff cadre.

The import ban would begin to hit government revenue in the second half. “Corporate taxes will be sharply down and Sri Lanka should prepare for its worse budget deficit in 35 years,” he said.

The SJB MP said that in spite of the reduction in tax relief to the public there had been no benefit felt by the people.  “Prices of essentials have in fact increased despite the reduction and exemption in some taxes. Food price inflation reached 12.9 in July. The national consumer price index reached 6.1 per cent in July. These are not our statistics. These are statistics coming out of government departments,” he said.

MP Wickramaratne said the previous government had been able to rectify a regressive tax system.  The direct “tax percentage was 25 per cent in 2019 and 75 per cent was indirect tax. When we took responsibility for the government, the direct taxes were only 12 per cent and we have been able to correct a regressive tax system taking away or lessening burden on the poor in this country.”

The external sector as a result of the poor fiscal management had also lost the opportunity in the global capital markets and the country was paying its external debt by running down the reserves.  By the middle of 2019, the government reserves had been USD 859 billion, Wickremaratne said. But within one year in June 2020, the reserves were USD 6.7 billion. Therefore, there were major debt repayments. In 2020, 2021 and 2022, Sri Lanka would have to pay mainly on sovereign bonds. Sri Lanka had another USD 4 billion debt maturing in 2020 and 2024.

The country’s debt was about 87 per cent of GDP and of this 57 per  cent of was foreign debt, non-concessional as opposed to only 2.5 per cent, 15 years ago, Wickramaratne said, adding that most of the non-concessional borrowings of 75 per cent equal to US Dollars 15.3 billion were international sovereign bonds. “China has now displaced Japan as the largest bilateral creditor to Sri Lanka amounting to 12.4 per cent of government debt. Out of $ 4.1 billion of Chinese lending to Sri Lanka, only $ 760 million are classified as official bilateral debt. The rest are considered as commercial.”

MP Wickramaratne said that external debt in Sri Lanka was predominantly by the public sector and very high in relation to current account receipts. The pressure would intensify in 2020, when current account receipts would fall sharply amidst the down turn in tourism, exports, remittances and capital markets financing costs as they go up.”

He added that the government had an issue with State-Owned Enterprises (SOEs) particularly as they had issued guarantees to the Ceylon Petroleum Corporation (CPC), the Road Development Authority (RDA), the National Water Supply and Drainage Board, Ceylon Electricity Board (CEB) and SriLankan Airlines. “SOEs like CEB CPC and SriLankan Airlines are problematic for every government and therefore, we need to restructure the debt. Giving government guarantees is only manhandling the data, making the government look good.” Eventually that risk is not a contingent liability.

Wickramaratne charged that the government had mishandled the fiscal part at the beginning and then turned to the Central Bank and wanted the CB to do something about the monetary space.

“Despite the fact you forced out two members of the Monetary Board, Dr. Dushni Weerakoon and Nihal Fonseka, and despite the threat to senior members in the CB, it is not a matter of people, it is a matter of policy that you need to correct. They have done their utmost. They have provided the liquidity, but the credit growth in May, June and July has been negative. It cannot be solved only on the monetary side because you have little space on the fiscal side.”

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Hemasiri’s counsel complains to PCoI against ex-President Sirisena’s media statement



… says it has placed the life of his client at risk

By Rathindra Kuruwita

Former President Maithripala Sirisena had placed ex-Defence Secretary Hemasiri Fernando’s life at risk by issuing a media statement that the evidence given by the latter before the Presidential Commission of Inquiry (PCoI) investigating the Easter Sunday attacks was “malicious and fictitious”, Attorney-at-Law Dilshan Jayasuriya appearing for Fernando said yesterday.

Jayasuriya told the PCoI that by issuing that statement Sirisena had also undermined the PCoI.

Sirisena, on Sunday, issued a press release claiming that the testimony given by Fernando at the PCoI about his behavior was completely false.

“I vehemently deny what was said at the Commission by Fernando. These are malicious and fictitious statements and I wish to reiterate to the public that Fernando’s statements are false,” Sirisena said.

Counsel Jayasuriya pointed out that by disseminating such an idea, the former President was trying to intimidate the former Defence Secretary who was still testifying before the PCoI. Sirisena, who was a former President, a current Parliamentarian and a party leader, was powerful and thus, there were now concerns about the security of his client, Jayasuriya said.

The counsel said that it was up to the Commission to decide whether Fernando’s evidence was true or false.

Issuing of a statement undermining Fernando by Sirisena, who was the Commander-in-Chief, the Minister of Defence and the Minister in charge of law and order at the time of the Easter Sunday attacks, was a very bad precedent, the counsel for the ex-Defence Secretary said.

“The former President has been given the opportunity to crossexamine Fernando. However, he has issued press releases. People will be afraid to tell the truth openly if powerful people start issuing press releases on judicial matters,” counsel Jayasuriya added.

Jayasuriya requested the Commission that Sirisena’s Personal Secretary, Sameera de Silva, who issued this media statement, be summoned before the Commission. Silva should explain why he should not be charged with contempt of court. He also requested the Commission to take measures to ensure the safety of his client.

When the Commission asked the counsel appearing for the former President if he had anything to say in that regard, he said that he had not received any advice from his client. Accordingly, the Chairman of the Commission ordered that if there was anything to be said by Sirisena in that regard, it be presented before the Commission today through his legal representatives.

The Additional Solicitor General, who is leading Fernando’s evidence, also informed the Commission that she hoped to comment on the matter once the explanations were made by the former President.

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Kandy tragedy:



What remains of the building that collapsed

Ill-fated building constructed on loose soil

By Ifham Nizam

Structural engineers’ approval was essential for the construction of building in hilly areas, a senior scientist said.

The National Building Research Organization (NBRO) Director (Landslide Research and Risk Management Division) R.M.S. Bandara told The Island to ascertain the real cause of the building collapse in Kandy on Sunday, an investigation would be conducted within the course of this week. “Initially we thought that could be done in two days or so,” he said

Bandara said that they would work with the Kandy Municipal Council Building Department to find out whether the original plan of the structure had been changed.

According to Senior Chartered Geologist Laksiri Indritilake, who was at the site, the NBRO team was carrying out the technical inquiry into the incident. He said as per their observations the collapsed building was an ad-hoc construction which had been erected blocking a valley path.

“Water flows from above grounds via a valley path. From our preliminary observations, it was evident that this building has been constructed blocking such a valley path. No safety precautions had been taken.”

“The multi-storyed building has been constructed on loose layers of soil in the respective valley region, and the building had caved-in, as the soil layers could not bear the weight of the construction,” said Samantha Bogahapitiya – NBRO’s Geologist in-charge of the Kandy district.

According to him, four families in the area have been were temporarily relocated as a precaution measure.

Meanwhile, Chairman of the Geological and Mines Bureau, Anura Walpola said that the collapse had not been caused by a tremor.

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SJB MPs decide unanimously to oppose 20A



by Akitha Perera

The Samagi Jana Balavegaya (SJB) would oppose the 20th amendment to the constitution to be presented to Parliament, today, Chief Opposition Whip, MP Lakshman Kiriella said yesterday.

The SJB had studied all the proposed amendment in detail and they couldn’t agree with any of them, he said. Therefore, the SJB had no choice but to work with like-minded forces inside and outside parliament to prevent the bill from becoming law, the MP said.

Kiriella said that SJB MPs HAS met yesterday in Parliament to discuss the matter and they unanimously agreed to oppose the amendment given the weakening of checks and balances imposed by the 19th amendment to the Constitution.

The Chief Opposition Whip said that the replacement of the constitutional council with a parliamentary council, the weakening of the independent commissions, increasing the powers of the executive presidency and removing a number of key institutions from the purview of the auditor general were proposals that would not be accepted by any democratic minded person.

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