Public finances

Thursday, 29 November 2018 00:00 - - {{hitsCtrl.values.hits}}

Public finance has become the latest and perhaps most important battleground for key political parties on either side of the constitutional deadlock, which continues to drag on with new twists and turns.

As the end of the year inches closer, concerns have increased over how money will be released from the Consolidated Fund to keep affairs of State running in 2019. Customarily a budget is passed in November outlining how public finances will be used in the coming year but with the constitutional standoff that has sprung up between the Executive and Parliament has disrupted this process.

A Vote on Account has been proposed as a compromise and the Cabinet appointed by President Sirisena on Tuesday approved this measure. The Vote on Account is to cover the first four months of 2019 but it is unclear when it would be presented to Parliament or whether it would be presented at all. The Sirisena-Rajapaksa faction clearly does not command a majority in Parliament and are unlikely to be able to muster enough votes to pass the Vote on Account. The Supreme Court decision, expected on 6 or 7 December, is also critical as it would essentially decide whether Parliament would be dissolved.

Since Speaker Jayasuriya has clearly stated that he does not recognise a prime minister, cabinet or government but President Sirisena has steadfastly refused to accept this, the legal status of the Finance Minister appointed by President Sirisena remains unclear. As such the United National Party (UNP) has contended that he cannot release money from the Consolidated Fund and has no authority to present a Vote on Account.

The United People’s Freedom Alliance (UPFA), of which the Sri Lanka Freedom Party (SLFP) is a member, contends this view and insists that Cabinet decisions are legal and if Parliament is dissolved the President has the power to gazette the requirements outlined in the Vote on Account and release money from the Consolidated Fund.

A group of UNP MPs earlier presented a motion in Parliament to prevent the prime minister’s secretary having access to public funds. Their argument was that as public finance is entrusted to Parliament an official who is not recognised by Parliament cannot order the release of funds. This motion is expected to be taken up today in the House and if so could throw the current impasse into further turmoil. 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.

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.