• P’ment told of measures to settle payments over 10 years 

• Pledges to keep House informed of borrowings unlike previous Govt.    

• Rs. 837 b in loans taken by CPC, RDA and SriLankan not included in public records 

• Rs. 58.4 b in EPF payments outstanding from ministries and departments, SLTB Rs. 13 b and Highways Rs. 24 b   

Prime Minister Ranil Wickremesinghe yesterday disclosed a debt repayment plan stretching over a period of 10 years to settle Rs. 11,000 billion obtained by the previous regime for different purposes. 

Responding to a question, Prime Minister Ranil Wickremesinghe updated the Parliament with the anticipated measures to broaden tax collection and narrow the Budget deficit to 3.5% of the GDP by 2020, which will support debt servicing.

“The Government will strengthen the revenue collection mechanism. 

With the Government expenditure kept at a controlled level, measures will also be taken to prevent an increase in recurrent expenses. A new financial management method will be introduced for this purpose. The Parliament possesses the financial powers and we will not borrow without keeping the House informed. The previous Government followed an arbitrary financial management system where neither the Parliament was kept informed of its borrowing nor were records maintained accordingly,” he said, promising the House that he would table the details of the utilisation of funds if borrowed.

“As at 31 December 2015 total debt stood at Rs. 8,503.2 billion. Foreign debt was Rs. 4,959.2 billion, while local debt was Rs. 3,544 billion. This is 77.6% of the GDP. We have spent Rs. 1,318 billion or 91% of the national income for debt servicing in 2015. During the last 10 years the National Water Supply and Drainage Board, Road Development Authority, Shipping Corporation, Sri Lanka Land Reclamation and Development Corporation, SriLankan Airlines, Ceylon Petroleum Corporation and the Ceylon Electricity Board have obtained direct loans from Hatton National Bank, People’s Bank and DFCC Bank. None of these loans are included in the total public debt records,” he said. 

“In 2005, total public debt stood at Rs. 2,222 billion. When the war was over in 2009 public debt escalated to Rs. 4,361 billion. By the end of 2014, it stood at Rs. 7,391 billion. So the total increase in public debt was Rs. 3,230 million during 2009 till 2014. The reason for such an increase during the past period was unknown,” said the Prime Minister.

However, with the change of governments details of loans were placed in the limelight, according to the Prime Minister. “We found how certain loan information was kept out from the public debt calculation. To name a few from a long list, this included the Rs. 365 billion the Ceylon Petroleum Corporation took, Rs. 260 billion the Road Development Authority has obtained and the Rs. 212 billion SriLankan Airlines has taken,” he added.

According to the PM, on the other hand the money that was supposed to be paid was also not met by the previous Government. “The Sri Lanka Transport Board has failed to pay Rs. 13 billion in contributions due to the Employees Provident Fund and the Employees Trust Fund. The departments and ministries owe a further Rs. 58.4 billion. The Ministry of Highways itself alone owes Rs. 24 billion,” explained PM Wickremesinghe. (AH)

Govt. to introduce new bond laws

Fresh legislation to make values published in Gazette flexible, make all bills and bonds including private placements secure

Attempting to deal with the fallout of the controversial bond issue, the Government yesterday assured it would pass new laws on Treasury bills and bonds to make their value flexible and give legal cover to all bonds already issued, including private placements.

The new laws would allow for the adjustment of the value specified in the Order published in the Gazette. At present the Gazette with all the details of the bond issuances for a particular year is released at the end of the year, which has raised concerns of due process.  

Prime Minister Ranil Wickremesinghe, responding to UPFA Joint Opposition Parliamentary Group Leader MP Dinesh Gunawardena in Parliament on Wednesday, said the new laws would declare legal all the Treasury bills and bonds that have been issued so far, including private placements. 

“The Registered Stock and Securities Ordinance of 1939 govern the Treasury Bills. Under that the Finance Minister should specify by Order published in the Gazette as to how much would be raised, the modes of raising, the rates and all the details in respect to each borrowing. According to the Ordinance, loans can be raised only after the Order is gazetted. Flexibility has to be there to raise a larger or lesser amount when the issue is taking place,” said the Prime Minister. He also noted the findings of the Presidential Commissions where such a notification was not followed and since 1999 such notifications were made at the end of each year. 

As per the proposed system, a newspaper advertisement will be placed based on the decision the Minister of Finance has taken.

“The new legislation will give the flexibility of raising the same amounts specified, or lesser or higher amounts than that. The legislation will provide for two other issues. One is declaring legal all the Treasury bills that have been issued so far. If not, some people may challenge them by saying we raised the money before the Gazette was issued and therefore they were not legal.”

“The other issue is the private placement. When this Government came we have made a public commitment not to have private placements but to go for public auctions or use any other transparent system. Nevertheless, private placements have taken place and it came out in the inquiries that there had been no formal decision even on private placements. Therefore, the same legislation will make all bonds issued in private placements legal. Otherwise, someone might challenge the Central Bank before the courts when we go to redeem the bonds,” he added. (AH)