Shuffle, urdens

Ood catastrophe, public debt soars to s. 9,387 million; PM appoints economic dy the debt situation

New Delhi was apprehensive of any US access to Trincomalee that would pose security threats to them at a time when the Cold War was at its height between the US and the former Soviet Union. The then Indian Foreign Secretary Romesh Bhandari was despatched to Colombo by late Premier Indira Gandhi as special envoy for a meeting with the late President J.R. Jayewardene. After discussions, Jayewardene was to direct that fresh offers be called.

A three-member Tender Board comprising G.V.P. Samarasinghe (then Cabinet Secretary), General Sepala Attygalle (Defence Secretary) and Daham Wimalasena, Chairman CPC once again recommended that Coastal Corporation be awarded the tank farm project. Amidst mounting Indian protests, Jayewardene sent Finance Minister Ronnie de Mel and Wimalasena to New Delhi. They met Premier Gandhi and the Indian Defence Minister Jagjivan Ram. However, an apprehensive New Delhi opposed any American presence in Trincomalee -- a move that was to see the birth of a separatist insurgency in Sri Lanka with support from Ms Gandhi’s Government.

These issues notwithstanding, India has granted Sri Lanka a credit line of US$ 45.27 million for financing the rehabilitation of the Kankesanthurai Port in the northern Jaffna peninsula. The port which adjoins the Palaly military base and the Northern Area Navy headquarters was not operational until it was cleared after the military defeat of Tiger guerrillas in May 2009. The guerrillas bombed cargo and naval vessels inside the port blocking access to the quays. The rehabilitation will include dredging shallow areas while making provision for more ships to dock there.

Sirisena naming Arjuna Ranatunga as the new Minister of Petroleum Resources Development, it is clear, is much to the dislike of the UNP leadership. There were fears whether he would oppose the tank farm project much the same way he did with the Hambantota Port issue. However, SLFP ministers argued that he would not defy President Sirisena and would heed his wishes. Chandima Weerakkody has been placed in charge of the relatively unimportant Ministry of Skills Development and Vocational Training, hitherto held by Mahinda Samarasinghe.

The other ministerial changes appear marginal. S.B, Dissanayake, Social Empowerment and Welfare Minister has, in addition, been given Kandyan Heritage. He had confessed to friends, weeks earlier, that he was set to receive this additional subject. Labour and Trade Union Relations Minister John Seneviratne was given an additional subject – Sabaragamuwa Development. It is interesting to note that only some provinces have ministers in charge of development. They are Patali Champika Ranawaka (Western Province), S.B. Nawinna (Wayamba Development) and Sagala Ratnayake (Southern Development). All other provinces have not been placed in charge of ministers. Media Minister Gayantha Karunatilleke sought a change. He is learnt to have been offered Public Administration but was not in favour. Hence, the subject of Lands was given to him, a portfolio that was garaged with his UNP colleague Tourism Minister John Amaratunga. He has now denied that he sought the subjects of the Government Printer and a few other institutions, that were under the Media Ministry, be brought under his new Lands Ministry.

Some of the Deputy Ministers and State Ministers were also expected to be shifted around last Monday. The only change was Fisheries Minister Mahinda Amaraweera being additionally made Minister of State for Mahaweli Development. However, Sirisena who spoke to Ministers, Deputies and State Ministers before the reshuffle said that within a week (after his return from Australia), there would also be a reshuffle of deputies and state ministers. He said that since 1994 he had experienced ministerial changes. There would be some who would be unhappy but such changes, he said, were necessary. Sirisena is also proposing to effect a reshuffle of Ministry Secretaries.

Whether the measures proposed by Sirisena would be delayed due to devastation caused by prevailing torrential rains remains a question. Flooding and landslides have caused more than a 100 deaths with dozens reported missing. It came in the aftermath of a prolonged drought. It was only weeks earlier the Government finalised a relief package to affected families with a two million US dollar assistance from the World Food Programme (WFP). It will go to 6,250 poorest and “most vulnerable households” in the districts of Moneragala, Kurunegala, Vavuniya and Mannar. The WFP had proposed cash assistance amounting to Rs 10,000 a month with the condition that those families should be headed by women. The assistance programme will be implemented by the Ministry of Social Empowerment and Welfare with the assistance of District Secretaries, Grama Niladharis and Samurdhi Officers among others.

The severe drought until last week and the heavy rains this week will no doubt cost the Government substantial amount of money both in terms of rehabilitation as well as compensation payments. This is at a time when the economic situation is worrying and concerns are rising over public debt.

After a lengthy discussion over the public debt situation at a meeting of the Cabinet Committe on Economic Matters (CCEM) Prime Minister Wickremesinghe who chaired the meeting, appoint- ed a Committee to study and report on the debt situation, growth momentum, export-oriented economy and how to plan next year’s budget “to ensure value for money.” The Committee is chaired by Treasury Secretary R.H.S. Samaratunga, includes Central Bank Governor Indrajit Cumaraswamy, R, Paskaralingam, Advisor to the Ministry of National Policies and Economic Affairs (under the Prime Minister), Charitha Ratwatte, Advisor to the Prime Minister, Mangala Yapa from the Ministry of Development Strategies and International Trade and Sarath Rajapathirana, Economic Advisor to the President. At a meeting of the CCEM it was observed that Sri Lanka had to borrow extensively due to “the low domestic private savings, persistent budget deficits and persistent current account deficit in the balance of payments.” It was revealed that the Central Government debt had increased to Rs 9,387 billion in 2016. During that year, “the outstanding debt stock of the country comprised 57 percent of the domestic debt and 43 per cent of the foreign debt. Domestic debt consisted of short-term debt that accounted for 18 percent and medium to long term debt comprised the balance. The foreign debt stock of Sri Lanka consists of both loans obtained on concessional terms and non-concessional or commercial terms.

“In addition to direct borrowings of the Central Government, the funding requirement of the Government has also been met through a number of other sources in the recent past. By end 2016, debt raised by such corporations amounted to Rs 827 billion. It was reported that Sri Lanka’s high level of debt necessitates immediate fiscal adjustments to ensure a sustainable level of debt. Therefore, it was reported that enhancing revenue and increasing public expenditure efficiency by rationalising recurrent expenditure, while maintaining productive capital expenditure at a reasonable level, are crucial measures to be followed until a sustainable level of debt is reached.”

It is clear that the new Finance Minister, Mangala Samaraweera, would have to work closely with the CCEM in not only formulating the next (2018) budget, but also any other fiscal measures he may want to introduce. In doing so, he also will have to deal with public enterprises that are bleeding the country’s resources. One such venture is SriLankan Airlines, the national carrier.

In April, this year, the state owned banks – Bank of Ceylon and the People’s Bank – approved the issue Letters of Comfort for the tune of US$ 35 million on the grounds that it was until talks with the US-based TPG (Trans Pacific Group) for a PublicPrivate partnership is concluded. The company was then conducting a survey of all SriLankan Airlines assets. The TPG has since declared it was not interested in going ahead with the project. Now, the Government has made soundings to other airlines.

The Letters of Comfort from the two state banks are US$ 32.50 million for SriLankan Airlines and US$ 2.5 million for Mihinair, now owned by the former. Public Enterprise Development Minister Minister Kabir Hashim sought ministerial approval to obtain the Letters of Comfort so the airline could raise funds through another bank using the document as a guarantee. The Letters of Comfort valid for a year beginning May 1, 2017 Hashim told ministers, is until a final decision is made on the public-private partnership (PPP) and “financing from the shareholder is finalised.” The pull-out by TPG has now caused a serious uncertainty and raised worries over more funding from the Government becoming necessary to sustain the loss-making national carrier. He said that the Cabinet Committee on Economic Management (CCEM) also granted approval for a loan facility of US$ 65 million from the two state banks.

On its part, the SriLankan Airlines has suffered a loss of more than US$ 30.2 million from flights departing Colombo when the runway was under repairs. Similarly, the loss as a result of a curtailment of arrival flights, was more than US$ 18.5 million with the total loss being US$ 48.6 million. Enterprise Development Minister Hashim told ministers recently that SriLankan Airlines “continues to make losses as a result of having to absorb the interest cost on the current loans outstanding.” He has lamented that “the company does not have any other source of funding or an alternate method to manage its funding requirements.”

Besides economic woes, the Government is also preoccupied with political issues, particularly the formulation of a new Constitution. An SLFP subcommittee met last Monday to discuss the draft Steering Committee report. There is no change in the party’s position that the Executive Presidency should be retained particularly on the grounds that an abolition would inevitably require a national referendum. It was decided to further discuss all issues and formulate their response. The subcommittee meeting was followed on Monday night with a Central Committee session chaired by President Sirisena.

The Steering Committee itself was embroiled in a heated debate after members of the ‘Joint Opposition’ raised objections to the deletion of the word “unitary” when a reference is made to the State. “JO’ leader Dinesh Gunawardena said yesterday that the issue met with strong objections from some members prompting a debate for two consecutive days. Tamil National Alliance (TNA) leader Rajavarothayam Sampanthan insisted that there was no need to retain the word “unitary.” If the pro-Maithripala Sirisena SLFP member Dilan Perera concurred with the move, there was no comment from Minister Susil Premajayantha. However, SLFP sub-committee Chairman Nimal Siripala de Silva insisted that the word should remain.

The much-hyped Cabinet reshuffle, which is clearly a quid pro quo between the SLFP and the UNP, is now over. Highly placed sources within the Government claim that further changes are not ruled out. This is on the basis that some ministerial changes which President Sirisena sought from Prime Minister Ranil Wickremesinghe are yet to be made.

Sirisena has conceded in his speech after the reshuffle that disappointments were to be expected. That appears to be a mild understatement. All in all, the events that led to the reshuffle and last Monday’s event itself have drawn clear lines between the two principal partners in the Government -- the SLFP and the UNP. How that will impact on ‘good governance’ in the weeks and months to come will remain a critical question. Thus, President Sirisena has one more burden to bear as he faces the many challenges, with some promises unfulfilled and others partially done. My dear Reshuffled Ministers, I thought I must write to you because I assumed that you must be as confused as I am about this reshuffle. It was a long time coming but when it finally saw the light of day, I daresay it was a damp squib, with you lot playing musical chairs and shifting around, like you did in kindergarten.

Ravi, I feel for you. Only a few months ago you were hailed as the best Finance Minister in the Asia Pacific region-but you have been dumped now. I have come to the conclusion that winning titles which say you are the best is bad. Remember what happened to the world’s best Army Commander?

We all agree that the economy is in a mess, but as Mahinda maama’s chaps gleefully point out, surely it is not all your fault? After all, it was Maithri who said that he wouldn’t let you impose a VAT on everything and it was the Green Man’s nominee who is now being investigated for the bond scam!

Then there is all this talk about you being in charge of Foreign Affairs but SriLankan Airlines coming under you. I’ve heard people protesting saying that is absurd but I can’t see what the fuss is all about. Surely, who but the Foreign Minister should oversee an airline that flies only to foreign countries?

Mangala, I think you must be wondering whether to laugh or to cry. There you were, jetting in and out of the capitals of the world, trying to shore up our image. You got more time from Geneva and we are about to get the GSP+ back- and now, you are being shown the door and sent to the Treasury instead.

As if that were not enough, they have given you the Media ministry as well, leaving poor Gayantha fuming. We know that you have turned over a new leaf since joining the Greens and done some good work on your overseas beat but we hope that you have mellowed with age and changed your attitudes.

Remember when you held the Media Ministry under Satellite? When the media exposed corruption during that time you called it the ‘media mafia’. You said journalists could be bought for a bottle of arrack. We haven’t forgotten that, nor have we forgiven you. Here is your chance to make amends.

Arjuna, you are another with a world title who had to suffer. You argued too much about the Chinese and the Hambantota Port, so they put you in charge of petrol. I bet you will now have things to say about the Indians selling petrol here. What’s more you have to find a job for Dhammika aiya as well!

SB, you must be a happy man. At the last big election you were with Mahinda maama, hurling insults at Maithri. After Maithri won, you switched sides. Last week you were rewarded with the additional subject of Kandyan heritage. Now, you can officially take care of that mansion at Hanguranketha!

Mahinda Sam, you too must be euphoric. You have gone from being with the Greens to being with the Blues and then from being with Mahinda maama to being with Maithri and then losing at the election only to enter Parliament through the ‘back door’, the National List, just like SB did.

After being put in charge of Skills Development and Vocational Training - whatever that means - you have been asked to look after our Ports. You are lucky you were at the right place at the right time but having seen what happened to Arjuna, keep your mouth firmly shut if you want to keep your new job.

Tilak, you are also lucky to be back. You did the decent thing when you resigned after defending Avant Garde in Parliament - although Justice Wijey did the same thing and didn’t resign. But, we don’t know what ‘Development Assignments’ mean - especially when there is no development now!

Mahinda Amarey, you weren’t so lucky. You began this speculation about a reshuffle when Maithri said some time ago that you will be given a job to serve the whole country. What you have now got is a state ministry for Mahaweli - Maithri must be thinking the Mahaweli runs through the whole country!

So, at long last, we have the reshuffle that many had been waiting for. I suppose it will keep a few Greens and a few Blues happy but I don’t think it will serve any worthwhile purpose at all. After all, what is the point in shuffling the same pack of cards, if the jokers in the pack are not taken out first? Yours truly, Punchi Putha PS: Usually, there is a photograph taken after a new Cabinet is sworn in. There was a photograph taken this time too, but it included only the ministers whose subjects had changed. At least they had the sense to do that because, if they included the entire Cabinet in it, it would be the same old photo!

It is clear that the new Finance Minister, Mangala Samaraweera, would have to work closely with the CCEM in not only formulating the next (2018) budget, but also any other fiscal measures he may want to introduce. In doing so, he also will have to deal with public enterprises that are bleeding the country’s resources. One such venture is SriLankan Airlines, the country’s national carrier