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Karunanayake’s response is welcome since it allows the readers to make a judgment about the issues having considered all the arguments. However, my reading is that it is a personal attack rather than a professional response.
My pension is a way below which Ravi Karunanayake has mentioned in his letter and I am glad if I am paid such a high pension; the total benefit package I got at retirement was my own provident fund which consisted a part of my lifetime savings; it is also what is available to any officer of the Central Bank and not exclusively to me; it was also a way below what he had mentioned; it would have been better if Karunanayake had checked this with me before putting it in writing without creating numbers out of his own imagination.
Though he has branded me as an economic hit-man today, top leaders in his party used my critical analyses on the economy during the previous administration liberally; In fact, when he was sworn in as the Minister of Finance in January 2015, I was one of the very first persons whom he called to Ministry to have a one-on-one discussion on the economic policy to be adopted by the Government; on inquiry by him, I advised him that the decline in the fuel prices in the global markets at that time was only a temporary phenomenon and they would rise again making it difficult for the Government to increase the same in the local market without earning public outrage; I in fact made this publicly known just before the elections in one of the articles in this series
about the proposed increase in the salaries of public servants, I advised him to take measures to improve productivity so that its inflationary impact could be mitigated; this was the topic of analysis in one of my weekly articles in this series
my analyses were always objective and when the Central Bank was taken out of his Ministry, I wrote in my weekly series that that particular arrangement was unworkable both legally and operationally
my analyses on his policies such as getting a Belgian investor to provide $ 1 billion to rescue the rupee were all based on hard economic facts rather than a personal criticism of the Minister
they were all critical analyses and the objective was to get the new Good Governance Government on the right track; anyone reading through those articles will discern this point.
Private placements were not started by me as Karunanayake has claimed; in fact they were started by A.S. Jayawardena in 1997 when Sri Lanka introduced the Treasury bond scheme; at that time, I was a ‘podian’ in the Central Bank hierarchy; the reasons for Jayawardena to introduce it was the foresight he had that if a few primary dealers got together to corner the market, for the bank to have a weapon to fight it; this has been amply explained by me in a number of articles I wrote to Daily FT
(See: http://www.ft.lk/columns/direct-sale-of-government-securities-demon-or-servant/4-553934);
the outcome of the abrupt decision of the central bank, not by Karunanayake, to abolish the private placements in February 2015 has now vindicated Jayawardena.
If Rs. 1,000 billion had been stolen from the Treasury bond market as claimed by Karunanayake when I was the Deputy Governor, that would have been a super theft since the total Treasury bonds issued by the Government as at end of 2008 amounted only to Rs. 1,281 billion; if anyone can steal Rs. 1,000 billion out of that issue, that would have been a real super theft; I would have wished Karunanayake, a professional accountant, to have these numbers checked before putting them in writing; had he contacted me, I would have in fact apprised him of the real situation because my understanding is that this total loss to the ‘economy and not to the Government alone’ is estimated to have occurred in the bond scams after February 2015.
The Board papers originate in the relevant departments of the Central Bank and not by Deputy Governors. Their job is to submit them to the Board on behalf of the Governor who has to prepare the agenda of Board meetings. It has been the practice in the Central Bank that if there is no time to have Board papers retyped with all the amendments, they are submitted to the Board as they are so that the Board could take note of those amendments when it makes the relevant decisions. Hence, it is not a crime to insert an amendment to a Board paper as claimed by Karunanayake.
The Central Bank is reported to have started a forensic audit on the Treasury bond market during the period which Karunanayake has referred to; we have to wait for the forensic audit report to make any judgement about the thefts which he has mentioned in his response. The Auditor General’s report which Karunanayake has quoted has reported to him that majority of direct placements have been made at or above the prevailing market prices so that they all have been made to satisfy the desired objective of bringing the minimum cost to the Government (p 6).
I have brought this to the notice of the Prime Minister Ranil Wickremesinghe and Finance Minister Karunanayake in one of the articles in this series immediately after the report was out (See: http://www.ft.lk/columns/in-defence-of-the-auditor-general-the-govt-should-not-blind-its-third-eye/4-594652).
Sri Lanka’s budgetary situation was in a pretty bad shape during the war time and every attempt was made by the Public Debt Department officers to raise the required funds to meet the rising Government expenditure programs. It was another war fought outside the battlefields at that time; if there had been any irregularity in that war as claimed by Karunanayake, that will be revealed by the forensic audit to be conducted by the Central Bank.
The acid test of the success or failure of economic policies adopted during any period is what has actually happened to the economy; the present precarious state is a testimony to that outcome.
Ravi K alleges W.A. Wijewardena involvement in private placements of Treasury bonds
