CBSL Governor, Auditor General become media darlings
Finance Minister Ravi Karunanayake
Finance Minister Ravi Karunanayake says that Sri Lanka is “out of danger” economically speaking, but added that “we are in turbulent times.”
Here are edited excerpts of an interview he gave the Sunday Times:
Q: The state of the economy, some say, is in bad shape. What is your response?
A: Thank you for asking me that question. I must put it in proper perspective. What was handed to us on January 8, 2015 was an economy in chaos. It was dangerous. In military terms, it was a grenade, pin removed and waiting to explode any moment. We introduced several measures for financial discipline and fiscal consolidation. The revenue that was going into individual pockets was brought into the Treasury. With that we were able to bring financial discipline. Nobody thought revenue will increase and the budget deficit will be brought to that level. There are pundits who are talking. There are two types. One is from outside and the other from within; they speak because of jealousy.
I would say respectfully, that the economy is in good stead. We are off the danger level but certainly we are in turbulent times. I don’t dispute that.
I respect the World Bank, the International Monetary Fund, the Asian Development Bank and the Asian Infrastructure Investment Bank for assisting us and having confidence. The investments are bringing dividends today. We are a small leaf that blows away when (US President Donald) Trump decides to increase interest rates. What can we do?
That is how we are navigating through turbulent times. So anyone who is mischievous… you can paint things in different ways. It is how you look at it.
(Former President) Mahinda Rajapaksa handed over to us a port that they spent Rs. 200 billion and yielded a revenue of Rs. 200 million as a return. We will need 200 years to pay that loan. We are saddled with a Colombo Port losing money for the Hambantota expansion. Our problems are because of that. The Mattala Airport is another case. Remember what has to be spent on development had to go for debt servicing. Who took that money? Rs 1,784 billion was our outstanding debt then. When they handed over (the Government) to us, it was Rs 9,900 billion.
Q: There is a claim that people had to pay more because of rash decisions taken soon after you assumed office in January 2015. You raised salaries of state service employees, reduced fuel prices and lowered prices of commodities to win the parliamentary elections in August 2015. Now you don’t have the money and are raising indirect taxes.
A: All I can say is that if they did not hand over a horrendous economy to us, some of these problems would not have been there. Are they (Rajapaksas) now telling us not to pay salaries?
Are they telling us not to lower prices of consumer goods? Don’t forget. When we reduced prices, the benefit went to the people. For 11 years they did not increase wages or lower commodity prices. Only one family made money out of it.
Q: Before the elections you said that monies stolen by the Rajapaksas will bridge your budget deficit. What happened?
A: Well, I would only say there is action being taken. I don’t want to say anything more. There are very serious things going on. Many will be surprised before too long.
Q: You once said you will enforce a “no questions asked” policy towards foreign investment. Didn’t that run against international and local money laundering legislation? What is the status on this proposal of yours?
A: When I said no questions, I was not referring to moneys raised through laundering, amassed from drugs or smuggling. Not even those obtained through corrupt means. If Sri Lankans have money overseas, I said, please bring it here. Don’t keep it in other countries. Why should anyone be worried? I am only saying bring the money here.
I have also offered resident visas to those who bring over US$ 300,000. There are many who want to come. We will go ahead with this arrangement. Some do not want things to happen. We will have a proper process of vetting and will not take everyone. Those who oppose this have moneys stacked abroad.
Q: said last week that Sri Lanka is a “high risk” country for investors. Transparency International says the corruption index in Sri Lanka is on the rise. How do you respond to these adverse overseas commentators?
A: We are startled at these revelations. At any given moment there has been transparency where we are concerned. We are looking into this matter. Our Ministry will respond soon.
Q: The Central Bank bond to a consortium of 16 local contractors and Rs 11.2 billion from the NSB and Rs. 12 billion from the People’s Bank would be required.
Karunanayake has told his ministerial colleagues the NSB has agreed to extend the facilities provided, however, on condition that the Government gave a time bound irrevocable Government guarantee in accordance with the National Savings Bank Act. He has pointed out that the NSB is 100 per cent owned by the Government of Sri Lanka (like the People’s Bank) and “there is no justification for one arm of the Government to insist on a irrevocable guarantee from the other arm” He has therefore recommended that the law be amended to have the General Treasury issue a ‘Letter of Comfort’ as the safeguard for the loan. Karunanayake told the Sunday Times yesterday that economically Sri Lanka was “out of danger” but added that “we are still in turbulent times.” The Q & A with him appears as a box story on this page.
Karunanayake also said that President Sirisena will soon chair a conference to be attended by Premier issues of 2015 and 2016 remain controversial. Bond issues, pyramid issues etc. by the Central Bank before 2015 have ruined its reputation. As Minister of Finance, what have you got to say when accusations have been made that you are protecting some of those whose names have transpired?
A: This is a peculiar thing. Three months after the new Government comes in and this group who created the Greek bond issue, (former CBSL) Governor Nivard Cabraal lost Rs. 76 billion through hedging. He lost billion rupees through Greek bonds. A huge amount was also lost through the pyramid scheme. Then the Ratwattes lost Rs. 13 billion of depositor’s money through their Entrust company. None of them has been raised by the Opposition. We opened it up.
The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) is now investigating the bond scam. The Supreme Court took up the matter and it went before the COPE. We are still being asked questions. Our issue is tell us where the loss is. Furthermore, there is a Commission of Inquiry. It shows we are not hiding anything.
Q: You have issues with the Central Bank Governor, the Auditor General, the Customs, and the Department of Inland Revenue among others. What are the reasons?
A: I believe in calling a spade a spade. Accusations always come on the politicians and I am politician. I am also a professional. On that basis I believe I must protect the institutions that I represent. The Inland Revenue Department has done a wonderful job. The Excise Commissioner has done a super job. I may have problems with the Customs but they have done their job. With regard to CBSL, we have a new Governor. It is not the Governor who is the problem. You have a bunch of crooks in the CBSL from the days of Nivard Cabraal.
They still remain. They are stifling the initiatives of the younger guys. They are the guys who are dictating terms. The conduct impacts on the President, the Prime Minister and the entire Cabinet of Ministers. Even the Auditor General must know his limits.
The Governor of the CBSL and the Auditor General should be seen and not heard. Suddenly they become media darlings. They are heads of institutions paid for by the people. I want a job done yesterday and not tomorrow. Wickremesinghe and himself. It is to discuss issues that have arisen with heads of the Central Bank, the Auditor General and the Customs and to ensure they do not make controversial remarks on his Ministry.
For President Sirisena, who is set to effect a ministerial re-shuffle as revealed in these columns last week, there are some formidable tasks. He has failed so far to re-unite his Sri Lanka Freedom Party (SLFP). His SLFP ministers who have urged him to contest the 2020 presidential election -- a move on which Sirisena himself has maintained a deafening silence -- want the Executive Presidency retained.
These pro-Sirisena SLFP Ministers have once again begun complaining that it was those within their ranks who were being subjected to FCID investigations whilst their partners in the UNP were ignored. Some of these Ministers are themselves facing corruption charges when they served in the Mahinda Rajapaksa Government. Hence, Sirisena has to walk a very tight political rope as he makes changes and fights to regain the credibility and popularity of his Government.