Govt saddled with Rs 572b in bills - Finance Minister

by Dhaneshi Yatawara

Finance Minister Ravi Karunanayake in an interview with the Sunday Observer says the government still intended to offer more benefits to the people, in addition to the promised public sector salary increase and other welfare measures, all of which adds to government expenditure. “It is the people who lost that extra support,” he says pointing out that the US$ one billion Chinese grant to Sri Lanka recently includes US$ 600 million for the health and justice sectors.

Finance Minister Ravi Karunayake

Excerpts of the interview.

Q: The government proposal to increase the threshold of Treasury Bills was defeated in Parliament. What compelled the government to take this route at a time when bank interest rates have been reduced and people's purchasing power is low?

A: We adopted an available method and is part of the existing market process. This government is saddled with Rs. 572 billion in bills to pay off, as a result of the haphazard financial decisions of the former Mahinda Rajapaksa Government.

There had been instances of overlooking or bypassing Cabinet approval and violations of financial regulations.

The economy is in shambles in a form much worse than what we imagined when assuming office. By December 2004, the country total limit for borrowing was at Rs. 250 billion. It was increased significantly and former President Mahinda Rajapaksa raised it to Rs. 850 billion. We proposed to increase the debt ceiling on Treasury Bills, to obtain short-term, low-interest funding to enable the Government to provide more benefits to the people. If loan interest rates could be reduced from 8–7% to 3-4 % won't that be a relief to the people?

Q: Do you believe the people have a good impression of the government when it is defeated at a financial bill. Doesn't this show that it is weak and cannot win the vote of the majority?

A: I don't think so. Even if 52 voted against there are still 173 agreeing. So there is a power of two thirds. This is not an Act, only a regulation. But it is disheartening to understand that there are Members of Parliament who are unable to understand this.

Even though the previous Government was heavily corrupt we are bound to continue with our duty. By defeating the regulation, Opposition Leader Nimal Siripala de Silva led the defeat of privileges people were to get.

We can increase the salaries of public sector employees and provide all the existing welfare measures. We have allocated sufficient funds for it. But we were hoping to give more. It is the people who lost that extra support.

Q: What are the key financial frauds under investigation at present?

A: It unravels every day and we cannot say that this is the fraud of the day or the moment. It keeps moving everyday. So what we have highlighted is the list what we already know and investigations are continuing.

Q: Are there any frauds you consider as priority issue, yet to be investigated?

A: We do have priorities. But when we have one priority today, a bigger one comes tomorrow and overtakes the existing one. It is a changing situation. We are managing the situation which is the most difficult thing.

Q: China has pledged over one billion dollars in new grant money to Sri Lanka. To what areas will this money go?

A: It is US $ 600 million fund. It will be used in the health, justice sectors and projects that they had done before. They have added grants for those projects through this. It does not come with conditions. We will not accept funds with conditions.

Q: Besides the controversial Port City project, are there any other Chinese funded projects under government review?

A: That is the only investment by the Chinese government. Other projects are on loans.

Q: Will the Government cancel the project. It has sent confusing signals over this project.

A: No the government has not taken any such decision. Who gives confusing comments? We have told them to give a legal certification for the way forward.

Q: The Government has called for the reinstatement of GSP plus. If and when granted, the Government must fulfill the obligations to practice good governance and protect human rights and fundamental rights. Can the Government ensure this?

A: Of course. That is why they are speaking with us. So the GSP is coming. Otherwise they would not even come. They see a difference. Has the present government granted too much democracy? Are there white vans coming to abduct journalists? Internationally we are now recognised as a government with good governance.

Q: You have made critical references to massive State corruption by the previous Government? As the Finance Minister what directives have you issued to launch investigations into these allegations?

A: I have been critical because of severe corruption. It is despicable to see that no steps were taken against such corrupt activities. All we have done is to launch investigations.

Directives have been given to look into any activity done fraudulently and suspiciously, investigated properly and due action taken.