Protecting public finance

The importance of public finance spans beyond the economy to be a critical part of governance. The transparent and accountable management of public finance is essential for the smooth functioning of the public sector and the development of a country. Therefore the legality of the transactions made with public finance is also of paramount importance and must be seen to be legal as well as be legal.  

Given this situation the motion passed in Parliament on Friday to cut funding for Ministers, Deputy Ministers, State Ministers and their private staff with immediate effect will have a significant impact on how the Cabinet appointed by President Maithripala Sirisena after 26 October would be viewed by the public. The motion, which was passed with 122 votes, also warns State officials acting in contravention of the resolution of Parliament are expected to be dealt with according to the law. This may put senior public officials between a rock and a hard place as they would be caught between orders from the Sirisena-Rajapaksa Cabinet and Parliament. Funding cuts will not affect public servants, which is important as the Constitutional deadlock is not their fault.  

The motion to cut funds to the Sirisena-Rajapaksa Cabinet comes just a day after a motion was passed in parliament on Thursday curtailing funding to the Secretary of the Prime Minister’s Office. The parliamentarians who supported the motion argued that as public finance is entrusted to Parliament an official who is not recognised by Parliament cannot order the release of funds. 

The impact of these motions remains to be seen as UPFA has steadfastly stuck to its guns and insisted that President Sirisena and the Cabinet appointed by him after 26 October has legal validity. They have also emphasised that decisions made by Sirisena’s Cabinet, which included two lucrative projects handed to two Chinese companies last week, are legal. President Sirisena has also not indicated whether he would accept the latest motions as he has rejected the no confidence motion passed by Parliament. 

As the battleground between the Executive and Parliament spreads to public finance the questions over the legality of decisions made could rise leading to a snowballing crisis that would be hard to roll back. Public finance should be used in the public interest and not to score political brownie points. It is imperative in this situation that President Sirisena and his appointees work on clarifying the legal ramifications of the decisions taken in parliament, rather than attempting to steam roll over the motions by using Executive powers.

The only silver lining in this complicated situation is that the Central Bank is empowered to raise funds for Sri Lanka’s debt repayments sans a formal Budget and has already outlined plans on how to raise $1.5 billion needed to debt servicing by April 2019. But this state of affairs is clearly unsustainable and needs to be democratically resolved so that Sri Lanka’s economy can have a level of stability that would enable both the public and private sector to function. It is also critical to enable the Central Bank to go to international capital markets and raise funds at competitive interest rates for debt repayments. If the legality of public finance is undermined that would have consequences beyond what the Executive and Parliament can control.