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Godahewa compares move on SriLankan Catering with H’tota port sell-off
‘IMF deal no panacea for all our ills’
By Shamindra Ferdinando
Gampaha District MP Dr. Nalaka Godahewa has accused the cash-strapped government of planning to sell-off profitable state enterprises to raise funds. Comparing the proposed privatization of SriLankan Catering with the sell-off of the Hambantota port, in 2017, by the Yahapalana government, Dr. Godahewa pointed out that such strategies would be disastrous, in the long term, as the Treasury lost annual income from such highly profitable ventures.
One-time Viyathmaga activist estimated the annual SriLanka Catering profits at Rs. 3bn. The government has also been accused of planning to sell-off other cash cows, like the SLT and the SLIC.
At a meeting organized by the ‘Nidahas Janatha Sabhawa,’ in Kandy, over the last weekend, lawmaker Godahewa dealt with the developing economic-political and social crisis with the focus on the controversial staff-level agreement with the International Monetary Fund (IMF) for a USD 2.9 bn loan facility. Among those present were SLPP rebel group members Prof. G.L. Peiris, Prof. Charitha Herath and Prof. Channa Jayasumana.
Acknowledging the daunting challenge, faced by President Ranil Wickremesinghe’s government in coping up with the unprecedented economic fallout, Dr. Godahewa stressed that the incumbent administration couldn’t, under any circumstances, deprive the right of the Parliament to receive a copy of the agreement with the IMF.
The IMF, on September 01, announced the finalization of the agreement for what it called Extended Fund Facility (EFF) for USD 2.9 bn meant to restore macroeconomic stability and ensure debt sustainability. Demanding that the agreement be tabled in Parliament, without further delay, Dr. Godahewa alleged that the government was making a silly attempt to portray the EFF funding, made available over a four-year period, as panacea for the economic fallout.
“The developing crisis is so acute, the economic recovery cannot be solely dependent on the IMF loan facility,” Dr. Godahewa told The Island, urging the government to take the public into confidence, without further delay.
“If the Parliament is responsible for public finance and enactment of laws, there cannot be any justifiable reason to deprive its members of their right to know the contents. The issue at hand is whether the Cabinet-of-Ministers is aware of the IMF deal,” Dr. Godahewa said.
Addressing the gathering in the hill capital, lawmaker Godahewa said that the public response, as well as of theirs to the staff-level agreement, would depend on the contents of the agreement.
He urged the government to disclose the agreement on increasing of taxes, as well as services provided by the government and the impact on the hapless public. Profit-making state enterprises, guarantee a transparent process in respect of the proposed restructuring of both loss- /profit-making state enterprises, agreement on pruning of the public sector, compensation for those to be retrenched, free health and education, he said.
Dr. Godahewa said that the government couldn’t go ahead with such a far reaching agreement, without consulting all political parties represented in Parliament. The Parliament couldn’t be deprived of its legitimate right to be informed and assert overall authority regarding the agreement, Dr. Godahewa said, finding fault with the government for not taking the Parliament into confidence, before the Central Bank announced Sri Lanka’s decision to suspend repayment of debt.
At the time the CBSL Governor, Dr. Nandalal Weerasinghe, made the announcement, Gotabaya Rajapaksa served as the President and head of the Cabinet-of-Ministers, whereas some described the move as a pre-emptive negotiated default.
Dr. Godahewa asserted that the government should have discussed the issue at hand with creditors before such an announcement was made. Such unilateral actions undermined political and economic stability, in addition to creditors losing confidence in the country.
Strongly condemning efforts to deceive the public, on the basis of the much-touted agreement with the IMF, Dr. Godahewa reminded the government that the promised USD 2.9 bn loan facility to be received, over a period of four years, whereas Sri Lanka needed approximately USD 4 bn for repayment of its outstanding debt this year.
Pointing out that Sri Lanka required USD 4-5 bn, over the next couple of years, to service its debt, Dr. Godahewa asked the government to divulge how it intended to address the daunting task.
The MP warned President Wickremesinghe, and the SLPP, not to refrain from settling the debt during the remainder of Gotabaya Rajapaksa’s presidency.
The SLPP, on July 20, ensured the election Wickremesinghe by Parliament, as the 8th President, to complete the remainder of his predecessor’s term. Gotabaya Rajapaksa was elected in Nov 2019 for a five-year period, with a thumping majority.
Dr. Godahewa said that a tangible action plan was needed as the country experienced a USD 5 bn deficit in income and expenditure. Therefore, the SLPP-led government couldn’t overcome the crisis, through political jugglery, and effective measures were required to increase the income. The one-time Chairman of the highly profitable Sri Lanka Insurance Corporation asserted that foreign reserves should be increased to at least USD 10 bn. That would be the key to solving the crisis, Dr. Godahewa said, strongly criticizing the government for not addressing the issue seriously.
Lawmaker Godahewa said that the government shouldn’t exploit the balance of payments crisis to sell off national assets. Referring to the giving away of the Hambantota port on a 99-year lease by the Yahapalana administration, Dr. Godahewa asked whether anyone knew how USD 1.1, received from the Chinese deal, was spent.
During thenCOPE proceedings, several months ago, both the Finance Ministry and SLPA officials admitted that they weren’t aware how USD 1.1 bn was spent.
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Unions resist tripartite EPF management plan
… warn of dire consequences
A group of trade unions and civil society groups has requested President Anura Kumara Dissanayake to abandon his government’s controversial plan for the proposed tripartite management of the EPF.
The group has told the President: “We strongly object to the government’s plan to transfer the EPF to a tripartite board—jointly promoted by the Employers’ Federation of Ceylon (EFC), International Monetary Fund (IMF) and the International Labour Organisation (ILO)—and to increase the investments of those funds within private equity and debt markets.
“While the EFC and the government jointly project this plan as a ‘modern governance framework’, it poses a serious threat to the EPF’s financial stability, fiduciary conduct, and returns to workers’ life savings, with severe consequences for broader macroeconomic stability. Rather than replacing the corruption existing in the public sector, this tripartite framework paves the way for a corporate takeover of the EPF. Through this, the fund is exposed to unlawful business practices such as insider trading using internal information of EPF investments, conflicts of interest and corporate bailouts of unstable private companies.
“Sri Lanka’s corporate sector has a tremendously negative track record, which you alluded to during your victorious election campaign in 2024. This was recently unravelled by the multi-billion-dollar illicit capital flight through trade misinvoicing, which your administration is now actively working to curb in the imports sector.
“The recent banking sector fraud exceeds Rs. 13 billion; widespread corporate tax evasion destabilised the fiscal position (Sri Lanka Auditor General’s Department Annual Reports) and consequently inflated the tax burden on the general public. The EFC has found it convenient to remain silent about these crimes, possibly assuming that their silence would preserve their social standing. Considering this inherent corruption within Sri Lanka’s corporate sector and its disregard to the living standards of the general public, there is no realistic basis to integrate corporate interests to actively manage the EPF. The corporate sector of Sri Lanka has not developed sufficiently on technical and ethical grounds to safely entrust the largest retirement savings pool in the country. The EPF is a captive fund that has no mechanism for the owners to divest if the management is corrupt. This further increases the possibility of corporate fraud when the management of the fund is jointly held with the corporate sector.
“Furthermore, during the recent public discussion with trade unions, Deputy Minister of Finance Dr. Anila Jayantha pointed out that the domestic debt restructuring (DDR) would inflict a loss of Rs. 600 billion to the EPF. Our independent calculations—formally submitted as an affidavit to the Supreme Court approved by the Federation of University Teachers’ Associations in 2024—reveal that nominal loss alone is Rs. 634.4 billion. When factoring in foreclosed reinvestment returns, the true loss skyrockets to Rs. 1,711 billion, wiping out 48% of the fund’s projected gross income for the 2023 – 2028 period. Under the pretext of safeguarding the banking system, this colossal robbery preserved high yields on government bonds held by commercial banks and high-net-worth individuals, subsequently reaping them astronomical profits. Now, the exact same plunder is rearing its head again disguised as a tripartite committee.”
“The main arguments supporting our resistance and viable alternatives for optimising EPF management directly under the Central Bank of Sri Lanka (CBSL), are outlined below.
“Objections to the government’s tripartite proposal:
1. The “International best practice and conflict of interest fallacies”
The government holds that tripartite management of pension funds is the “international best practice” and that there is a “conflict of interest” in CBSL managing the EPF. They are key pillars justifying government’s tripartite proposal.
These two positions are shockingly misleading given that four of the five largest pension funds in the world, in Norway, Japan, the U.S., and Singapore, are managed directly by state bodies or central banks. Therefore, ‘international best practice’ in pension fund management is the exact opposite of what the government and the IMF are proposing. We hence reject these baseless positions.
2. Corporate captivity and bailouts
It is clear that the EFC is desperately pushing for this proposal at a time of global uncertainty, to cushion the effects of the crisis and maximise gains. Under corporate influence within the proposed tripartite board, the private conglomerates can use the multi-trillion-rupee EPF to continue their unstable commercial operations without having to risk their own capital or savings to do so. This will severely erode the financial stability of the EPF and its returns.
3. Risk of front running
“Because the EPF is a colossal fund, its investment decisions can alter asset prices. This creates immense monetary value for the information generated by its investment decisions. Corporate representatives on the proposed tripartite board will be perfectly positioned to use this information to trade ahead of the EPF (front-running), buying assets cheaply and dumping them onto the EPF at inflated prices for guaranteed corporate gain, resulting in a reduction of returns to the EPF.
4. Unavoidable loopholes
“Presence of a separate group of investment analysts, trade union representatives and government officials within the proposed tripartite structure cannot prevent pre-market corporate access to EPF’s investment decisions. Investment proposals made by the analysts has to be first approved by the proposed tripartite committee, making it impossible to prevent corporate access to insider information on EPF investments.”
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