Sri Lanka Finance Ministry accounts disclaimed; national debt wrong: AG
ECONOMYNEXT – Sri Lanka’s Auditor General has disclaimed the accounts of the Finance Ministry in a shocking development, saying he cannot given an opinion on the numbers, and national debt was 83.3 percent of gross domestic product and not 79.3 percent as reported.
Last year, the AG qualified its opinion noting problems in a number of areas, but said he could say that the accounts were true and fair except for the items noticed.
This year, accounts had been completely disclaimed due to the gravity of the problems discovered.
"Because of the significance of the matters described in paragraph 2.2 of the report, I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion," the Auditor General said. "Accordingly, I do not express an opinion on these financial statements."
The auditor general said balances of loans in the financial statements given for auditor appeared to be understated by 826 billion rupees.
The Auditor General, reporting on the finance ministry accounts of 2016, said total government debt was understated by several measures and actual debt totalled 9,864 billion rupees, which was 83.3 percent of the estimated 11,839 billion rupees in gross domestic product.
It overshot a limit set by fiscal responsibility laws, the auditor general has said.
Sri Lanka’s national debt has been understated in 2016 to show as 79.3 percent of gross domestic product by undercounting some of the loans, but liabilities are 83.3 percent of GDP.
Sri Lanka appeared to have been understating the liability of Treasury bonds for years. But, in 2016, the current administration started to recognize bonds at face value, the auditor general said, but an amount of 487 billion rupees relating to bonds issued earlier were not counted.
There were also off-balance sheet loans of 332.3 billion rupees.
When Central Bank advances (printed money) and bank overdrafts were added, the total debt was 9,864 billion rupees, the AG noted.
There were also other queries over a controversial payment to Golden Key investors, foreign debt and amounts relating to state enterprises.
It is not clear why the Finance Ministry had not worked with the AG to resolve the queries or provide explanations.
The data did not include 563 billion rupees guaranteed by the Treasury for state enterprises and agencies.
Other analysts had noted that agencies like the Road Development Authority (Fresh questions over Sri Lanka budget deficit, national debt numbers) and Water Board had been taking loans from commercial banks, but they did not have any or enough revenues to repay the loans. (Will Sri Lanka’s real budget deficit please stand up).
As a result, the guarantees were not a contingency liability, but a certainty especially in the case of the RDA.
Some other debt of state enterprises were also not recorded as public debt including some bonds issued to Co-operative Wholesale Establishment and Petroleum Corporation, according to earlier disclosures. (Colombo/June02/2017)