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Sri Lanka finance ministry accounts qualified by Auditor General

Jun 05, 2018 07:57 AM GMT+0530 | 1 Comment(s)

ECONOMYNEXT - Sri Lanka's Auditor General has issued a qualified opinion on the 2017 accounts of the finance ministry pointing out remaining problems with debt classification, after completely disclaiming the numbers last year.

The accounts labelled 'financial statements of the republic' give a 'true and fair view' in 2017 except for the problems identified, the Auditor General who refused to give any opinion in 2016, said.

He pointed out that the accounts only related to the consolidated fund of the central government, excluding those of regional administrations and state enterprises and it was a misnomer to call them financial statement of the 'republic'.

Though the government's debt has been stated as 9,588 billion rupees, the AG said another 803 billion rupees of debt was not accounted for.

About 433 billion rupees of debt related to the difference between the face value and their net value. Though debt issued from 2016 onwards was accounted for by the face value, older debt still remained as a net value.

There has been a debate around how to account for long term bonds with a coupon, where part of the interest is represented as a deep discount on the capital, when market interest rates are higher than the coupon. When market rates a below the coupon, bonds are sold a premium to face value.

The auditor general said another 330.2 billion in debt relating to 8 loan agreements were also not in the accounts.

About 150 billion related to loans taken by the government to build Hambantota port. A cabinet decision on July 20, named 'Hambantota Port Relief Agreement' had made the Treasury responsible for settling the loan, but it had not yet been included.

On three loans related to a coal power station had been included and 14.3 billion rupees in payments had also not been accounted.

Another 40.2 billion rupees of foreign loans realized during the year relating to 65 loan agreements had not been included, the AG said.

The AG had also found that on-lending of 181.3 billion rupees for several state and private agencies had been understated by 7.49 billion rupees.

An amount of 4.9 billion rupees in 2015 and 2.5 billion rupees in 2016 granted on a recovery basis to the Ministry of National Policies and Economic Affairs to settle Gold Key depositors had not been included. There were also no agreements relating to the loans.

A value of 578.4 billion rupees listed as investment in state enterprises, 23.5 billion rupees given the Water Supply and Drainage Board appeared to be understated, the AG observed.

Another 53.1 billion rupees in liabilities were also understated. These included 7.3 billion rupees of loans taken from Hatton National Bank (3.4bn), Commercial Bank (1.9bn), People's Bank (980mn) and DFCC Bank (980mn) for the ministry of defence.

The department of pensions had got loans of 45.7 billion rupees from People's Bank (21.0bn), Bank of Ceylon (16.4bn) and National Savings Bank (8.2bn) which had not been included as debt.

The Sri Lanka has also failed to comply with rule on the fiscal management responsibility act on the budget deficit and debt to gross domestic ratio, the AG said. The debt to GDP ratio appeared to be 81 percent, he said without counting Treasury guarantees. (Colombo/June05/2018)
 


 

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1 Comments

  1. RMB Senanayake June 05, 04:12 AM

    Who should be held responsible for these failures and transgressions? Shouldn't it be the then Minister of Finance? High time there is some public interest litigation suing the then Minister of Finance. What does the Prime Minister have to say?

    Can the public ignore these transgressions without recovering the costs from those who held responsibility and are accountable? What is the recommendation of the Auditor General regarding the recovery of the loss? RMB Senanayake Rtd CCS

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