Sri Lanka ex-President fires salvo at liability management bill, Audit chief
ECONOMYNEXT – Ex-President Mahinda Rajapaksa bas slammed a law that allows Sri Lanka to borrow more money this year to repay large volumes of loans that are maturing later, and has also question comments by the auditor general on debt.
Rajapaksa said the proposed law gives powers for the executive to raise saying it undermines the authority of the parliament. He also claimed that the executive has "unrestricted power" in using the money borrowed.
"Even if Parliament subsequently refuses to endorse the manner in which the money has been utilized, what was done on the authority of the Minister in the intervening period, would still be legally valid," he said in a statement.
"Furthermore, so long as it can be established that they acted in good faith, no civil or criminal liability whatsoever will attach to those involved with regard to the manner in which this money is used.
"Given the scandals that have already taken place in the issuance of public debt under this government, the danger inherent in this proposed law is obvious.
"Therefore, the Active Liability Management Bill should be resolutely opposed by every citizen of Sri Lanka."
However officials have said that under the law the money can only be used for "refinancing and pre-financing of public debts."
The parliament also has to pass a resolution to approve the borrowings on which a limit of 10 percent of total outstanding has been placed.
Bandula Gunewardene, a member of parliament backing Rajapaksa had also gone to Supreme Court challenging the Liability Management Bill.
Rajapaksa also slammed the current administration for borrowing large amounts from international and domestic markets and through currency swaps, though analysts say most of it has been rollovers of past debt.
Independent economists have however criticized a 2015 budget which raised spending and widened the deficit.
Rajapaksa’s proxy party, Sri Lanka Podujana Peramuna emerged as the largest single party in a local council vote earlier this month.
He also slammed comments by the Auditor General over the classification of debt in the past made just before the polls.
The AG had pointed out that some loans had been placed under agencies as ‘off-balance sheet’ in a bid to understate deificits.
He also questioned the accounting for debt and interest.
Rajapaksa however defended the accounting for debt.
"Sri Lanka’s state accounts are prepared on the ‘modified cash basis’ which is consistent with international standards and is accepted by multilateral bodies like the IMF," Rajapaksa said.
"This system records receipts and payments and places no emphasis on the balance sheet or on the valuing of a state’s assets.
"The ‘accruals accounting system’ which places emphasis on the valuation of assets is not used in our country in the preparation of state accounts." (Colombo/Feb27/2018)