Jayasundera - juggling the country’s finances
Decision-making on the country’s finances is either bizarre, plain stupid, indifferent or just arrogant. At a time when Sri Lanka’s coffers are bone dry, the Government offers duty free cars for former provincial councillors. Earlier this month cabinet approval was given, according to media reports, to a proposal to give duty free permits to former provincial council members after sitting members were given this benefit. While the second category are politicians who have been rejected by the people and don’t deserve this concession, such benefits for serving councilors is also questionable given the state of finances of the country and the priorities of the nation.
Why reward them from money that belongs to the people and for doing what? The Minister of Finance, the Treasury Secretary and all officials in charge of the funds that flow in from us - the people -must show the people that this money is spent on the development of the country, not a chosen few; not a few opportunists who deserve less, certainly not more.
There are serious flaws in financial governance and to some extent starts with the Government deciding to ignore a Supreme Court order finding Treasury Secretary P.B. Jayasundera guilty of wrongdoing in the LMS privatization deal. After being reprimanded for continuing in the job despite court strictures during the tenure of Sarath Silva as chief justice, the former top bureaucrat has the temerity to go back to court once Silva retires and withdraws an affidavit where he promised to step down. The Government then, in a slap to the rule of law, appoints him back. Jayasundera returns bigger and stronger and has been running the Treasury show ever since then.
Today the biggest challenge of the Government is finding cash to fund the large development works and many other grandiose projects. What is galling is that other important ministries including health and education are finding their approved budget allocations cut and part of that going to the ministries handled by the brothers (defence, urban development and economic development) whose expenditure is spilling over approved estimates. There are no cuts but more funds for these ‘favoured’ three ministries.
With the Government strapped for cash, a request for a US$1 billion loan for budgetary support from the IMF was turned down while another request of $700 million is set to go to the World Bank. Separately the Government has been borrowing heavily from private commercial banks running up to Rs. 60 billion, in February alone and more is being sought; simply because there is no more in the coffers and there are no grants, free money or low interest facilities. Most of the loans at 18 per cent interest are to meet salaries and other recurrent spending of the education and health sectors. This week, Opposition Leader Ranil Wickremasinghe said salaries of teachers were not paid on the 20th of this month, as routinely done.
Jayasundera is also in a serious conflict of interest situation with his twin positions of Secretary, Treasury and Secretary, Economic Development. For instance, while he is prone to turn down requests for funds from other ministries and in fact cutting from budget allocations or delaying payments, the same cuts are not applied at the Ministry of Economic Development which gets all the funds he wants, signed by the Treasury Secretary himself in his other capacity as Secretary, Economic Development. Has there been ever a case in the past of this kind of conflict in the Government where the Treasury Secretary is also the chief accounting officer of another Ministry? Senior officials from other Ministries are furious over this state of affairs which is, apart from the conflict, unfair by other agencies.
The Treasury is the reservoir of all funds that are collected through taxes and come into the Consolidated Fund and goes out to the various Ministries and state agencies according to an allocation basis which should also apply equally to the Economic Development Ministry; no special treatment.
The Government is walking a tight rope with absolute chaos (akin to the picture of traffic on this page) in financial management with loads of money being spent but little coming in. There is also divided opinion in the corridors of power in the Treasury and the Finance Ministry where Jayasundera alone calls the shots and doesn’t listen to anyone else, even if sanity prevails elsewhere and reasonable, face-saving advice is offered.
On the other hand non-performing loans (NPLs) are rising amongst commercial banks. Ironically commercial banks need no longer provide statistics on NPLs which, according to new reporting rules specified by the Central Bank, is not required. Thus the amount of NPLs is no more in the balance sheet with some banking experts suggesting that either this is a ‘Thank God’ provision in new international financial reporting rules or smugly introduced by the CB to hide the staggering amount of commercial loans taken by the Government. Questions are also surfacing as to whether respected business professional T.G. (Tanky) Wickremaratne’s resignation from Hatton National Bank (HNB) this week was partly because of governance issues as commercial banks, particularly those controlled by state agencies like EPF, come under severe pressure to lend to the Government.
The President must thank his stars that the country’s rural population, where his popularity and vote base lies, is not aware, at least adequately, about the state of the country’s finances. Many experts believe Sri Lanka is heading towards a Greece-like situation with banks snowed under heavy debt from government borrowings. If a Deshamanaya (national award) is to be bestowed on the long-standing Treasury Secretary, that surely would be for - over the years - being the greatest juggler of the country’s cash resources!