SC greenlights liability management bill

• Speaker informs P’ment of Supreme Court decision 
• Proposed legislation critical for better debt management 
• Paves way for Govt.to borrow up to 10% of total outstanding debt of preceding financial year
• Joint Opposition slams move, insists to SC that bill should get two-thirds majority

By Ashwin Hemmathagama – Our Lobby Correspondent

The Supreme Court has determined the Active Liability Management Bill is not inconsistent with the Constitution, Speaker Karu Jayasuriya told Parliament yesterday, paving the way for crucial legislation for better debt management. 

The Ministry of National Policies and Economic Affairs moved the Active Liability Management Bill on 19 February in Parliament with the aim of authorising the raising of loans within the country or offshore to improve public debt management. The bill also ensures that the financial needs and payment obligations of the Government are met at the lowest possible cost over the medium to long-term, consistent with a prudent degree of risk. Prime Minister Ranil Wickremesinghe is also the National Policies and Economic Affairs Minister. 

The bill was seen as crucial for debt management as Sri Lanka will see its foreign debt repayments nearly double from 2019-2022 as debt matures. Debt management is seen as critical for the Government to repay existing debt and also ensure that similar bunching of debt does not happen in the future. 

Sri Lanka currently pays about $ 2.5 billion in debt annually but this number is expected to approach $ 3.4 billion by 2019 and debt as a percentage of GDP is unlikely to reduce significantly until post-2022, according to ratings agencies.  

As per the provisions of the bill, the Parliament may, from time to time by resolution, approve to raise a sum of money during a particular financial year which will not exceed 10% of the total outstanding debt as at the end of the preceding financial year, as a loan whether in or outside Sri Lanka, in terms of the relevant laws for moneys to be raised including the provisions of the Monetary Law Act (Chapter 422), the Local Treasury Bills Ordinance (Chapter 417), Registered Stocks and Securities Ordinance (Chapter 420), or the Foreign Loans Act, No. 29 of 1957, for and on behalf of the Government for the purposes of refinancing and pre-financing the public debts of the Government.

However, UPFA Joint Opposition MP Bandula Gunawardane challenged the bill in the Supreme Court seeking a declaration that it should become law only through a two-thirds majority in Parliament and the approval of the people at a referendum.

MP Gunawardane also held that clauses 2, 3, 4, 5, 6,7, 9, 10,11,12,13 and 14 of the bill were in violation of and inconsistent with articles 3, 4(a), 12(1), 12(2), 14(1)(g), 75,148, 149, 150, 154R and the other articles of the Constitution. 

The petitioner stated that clauses of the bill at issue deprive and abrogate the powers of Parliament to have full control over public finance as provided in Article 148 of the Constitution and directly and indirectly suspend or make inoperative the provisions of the Constitution, particularly Articles 3, 4(d), 12(1) and 148, 149 and 150.