Conference – Maharagama Youth Service Auditorium – 2023.04.07
Selling and borrowing is not new. People always expected the economy to be good.
National People’s Power (NPP) leader Anura Kumara Dissanayake
JVP and NPP Leader Anura Dissanayake says, “These days, there is a discussion about some awakening in the economy. They have got a loan. The prices of some goods have decreased. People think that now our country’s economy has moved in a positive direction. Is it only today that the people of our country are looking at the positive direction of the economy? Was the expectation just today? The people of our country were seeing a good dream of the economy for a long time. People have always dreamt about the development of the economy. The ruling groups that came to power from time to time made various creations in the people’s minds. Due to the collapse of the economic policies followed from 1970 to 1977, rice queues, chilli queues, bread queues and other queues were formed in our country.
JR Jayawardene declared at 77 that he would make Sri Lanka a Singapore if he was given power. He made people dream of a state with big buildings, a disciplined country, wide roads, jobs for the youth, an increase in the country’s production, ports, airlines and banking services.
Today, Singapore’s annual economy is worth $ 424 billion. Annual production in Sri Lanka is $65 billion. That is in the year 2022. Singapore’s per capita income is $ 79,500. According to Sri Lanka’s national product last year, it was a little less than $3000.billion In 1994, Chandrika Kumaratunga said that this open economy brought great destruction to our country, factories and manufacturing establishments started collapsing. She also said there was a massive decline in politics, crime, corruption, and a state without the rule of law. She stated that the open economy is inhumane, and this needs to be given a humane face. The people thought that a good situation would be created in the country. There will be great growth in the economy, and an advanced factory system will be started using technology. People believed that a humanitarian economy would be built. However, the results were very bitter.
Later, in 2005, Mahinda Rajapaksa presented a programme to move the country forward by bringing the topic’ Rata Pereta’ (Country Forward). But it collapsed. In 2010, it was said that Sri Lanka would become an fantastic country in Asia. The people followed that auspicious dream. After that, Ranil Wickramasinghe came promising the people to build ‘good governance’. The people kept their faith through that auspicious dream. Ranil Wickramasinghe made the country with the largest debt stock acquired by one government in history. By selling international sovereign bonds for eight years from 2007 to 2015, Mahinda Rajapaksa had borrowed 3.5 billion dollars. But Ranil Wickramasinghe made the government of Sri Lanka the country with the largest debt stock by obtaining 12.5 billion dollars in the period of 04 years from 2015 to 2019. He started selling national resources. The people understood that good governance is also a mirage. After that, Gotabhaya Rajapaksa said that he will create a country that uses the most advanced tools. But in the end, it created a situation where China’s garbage hit Sri Lanka’s rice paddies. Again, the government reached an agreement with the International Monetary Fund last March. The government has launched a big media campaign that the only way to save this country is to take this loan. But the people have understood that this is a loan, this is a deception, and it is not the path for their journey. The rules are also competing to share who won this loan agreement. It is declared from that side that Basil Rajapaksa is the owner of the trophy of this agreement. There is a fight for the ownership of the cup of getting a loan for a country. They are trying to force the people into believing that this is the way to go.
Is this true? No. It was because of Central Bank Governor Nandalal that we had to reach an agreement with the IMF. He was appointed as the Governor of the Central Bank on Friday, April 8, 2022. There were three days’governemnt holidays. After three days of vacation, he entered the Central Bank on April 12. His first decision as Central Bank Governor was the decision that the Government of Sri Lanka would not pay the loans taken from foreign countries. It is clear that there is some interrelationship to take such a decision on the first day a central bank governor enters his office. According to Article 148 of the Constitution, the financial power of the country is completely with the Parliament. In the budget of December 2021, money was allocated for debt repayment in 2022. It specifically mentioned the amount of the loan to be paid and how to find the money for the loan to be paid. But without any understanding or informing the Cabinet or the Parliament, the Governor of the Central Bank takes a decision that the country will not pay the debt. Some Members of Parliament pointed out this as a violation of the Constitution.
If a country does not pay its debts, it is an expression of the country’s disobedience. If the loan is not paid, then an agreement must be reached with the IMF. There is no other alternative path. We could have gone to bilateral agreements for financing. By August 2022, credit facilities of 3.8 dollars had been taken from India only for the year 2022. There was an opportunity to extend the negotiations and get loan facilities. We could have entered into a loan agreement with India in accordance with the development paths we are adopting. Last March, 1.5 billion dollars worth of yuan loans were given. Even today it has been included in the reserves of the Central Bank. If we do not pay the debt, the opportunity to negotiate bilateral deals is closed. In order to get out of this crisis, a monetary deal was being discussed with Japan. If we don’t pay the debt, no one will lend to a country that doesn’t pay the debt. We also could have got a loan from the Asian Development Bank. All that disappeared after the 12th of April. With the decision taken by the Governor of the Central Bank on April 12, we were tied up with the IMF. This looks a very conscious move. The opinion that he sat in that chair for that purpose has emerged in the society.
2.9 billion dollars will be received for the period of 04 years. We receive almost 320 billion dollars every six months. This journey with the IMF is not a new journey for our country. We get the first credit facility from the IMF in 1966. From 1966 to 2016, we have obtained loan facilities from the IMF sixteen times. Along with this opportunity, we have taken loans on four occasions, an extended facility. It means running the economy according to an agenda given by them or according to an agreement with them.
There is a capitalist world centered on the United States. NATO creates the war agenda for the world. They decide the invasion of Iraq, Libya, Afghanistan. The UN prepares the peace plan and the political plan. The IMF prepares the economic plan. World Trade Organization, World Bank and International Monetary Fund programmes have been launched in many peripheral states. They have been intervening for a long time in order to make economic reforms, economic liberalization, giving up the state share in the economy, making room for the financial market to operate freely, allowing the capital to flow freely, and making the goods they produce to flow freely to the markets of the world. . The result has been the concentration of wealth in the hands of a few companies in the United States. The profits of some companies are greater than the national product of seven or eight countries located in the periphery. They have managed to acquire the markets and raw materials in the periphery. According to their recipe, there has been a tendency for the countries located in the periphery to become poorer and the states located in the center to collect the wealth and resources of the world.
Recently, an organization of professionals, doctors, top managers, university lecturers, who were affected by the high tax cut, held a discussion with the President, the Secretary of the Ministry of Finance, Sirivardhana, and the Governor of the Central Bank, Nandalal. Professionals have pointed out that it is difficult to sustain life on the taxes that have to be paid while earning. They offered to minimize the amount deducted as their taxes and the way to get the money to the bank. The President and the Governor of the Central Bank accepted it, and they said that they could not give a solution to this. They said they will get a discussion to the professionals with the IMF and ask them to present that problem. This means that neither the President nor the Governor of the Central Bank has the ability to make decisions in this economy. This means that we have lost our economic sovereignty.
There are three main areas that the International Monetary Fund focuses on. One is to enter the balance of payments. For them, this issue is a balance of payments issue. This is an internal problem of the economy. There was no plan to produce goods and services and increase export income according to the changes in the world market. The International Monetary Fund proposes an accounting solution to the deterioration in our economic fabric.
The second is how to bring in the government’s budget deficit, Last year the treasury received two hundred million rupees. This year’s debt interest premium is 2.2 trillion. 2 trillion is loan premium. 4.2 trillion is needed to pay the debt interest premium this year. Although the IMF has advised to enter this deficit in the account, there is no answer to the problems arising in the economic body. The social mechanism is not the answer.
Another suggestion of theirs is that the government should reduce its expenses. For that, they decide to sell the institutions that provide government services for money. Katunayake Institute of Engineering Technology, Marayan Engineering Teaching Institute the two N.D.T. and TTI institutions. Until last year, children were given free education in these institutions. It has been decided to charge two hundred and twenty five thousand from this year. Due to the need to reduce the cost incurred by the government to enter the account, the services provided by the government are being cut.
Another Cabinet decision was taken on the 21st. To privatize Institute of Industrial Engineering, Katubedda, Moratuwa. Automotive Engineering Training Institute, Orugudawatta. These institutions provided free education. Now approval has been given to charge fees. Education is limited to those who can afford education. The next decision for the budget is to cut subsidies.
In addition to the IMF, an agreement has also been reached with the World Bank. Accordingly, by March 30th, the target number of families that should receive direct subsidies should be identified. They are suspending the loan amount as the beneficiaries of such subsidy have not been identified. These subsidies are 187 billion rupees. It is a slight increase from last year. This has to be cut to get the World Bank loan. What is this for? To access the account. Discussions are also underway to reduce the civil service to six hundred. With these cuts, we hope to maintain a surplus of 2.3 percent of our primary account (compared to the national product) by 2024. The IMF says that the economy will shrink by minus 3 this year. The World Bank says that the economy will shrink by 4.2%. The budget shows the collapse of the economy. This issue cannot be avoided by accounting. What is the plan to increase the production of goods and services in our country? Their next proposal is to bring foreign reserves to $10.3 billion by 2025. This has never happened in history. The highest was 8.3 in 2014-2015. What should be done to increase foreign reserves? When the amount of dollars we earn exceeds our needs, they are added to reserves. Now the foreign reserves are expected to be created through the restructuring of Sri Lanka Airlines, Sri Lanka Telecom, Colombo Hilton Hotel, Sri Lanka Insurance Corporation and their controlled companies, Sri Lanka Hospital, and Shell Gas Companies. Simply put, selling and borrowing are the only options for increasing foreign reserves, reducing the balance of payments, and reducing the budget deficit. By the time this project is completed, we will take a new loan of 20 billion dollars in five years. In those five years, the IMF will take 2.982 billion dollars. The World Ban1will take 750 million the Asian Development Bank.2000 million and multilateral and bilateral loans will be 10.283 billion in. 3.75 billion international sovereign bonds will be sold. A debt of 20 billion dollars is expected. Of this loan, $13 billion will be paid off. We have 27 billion dollars to pay. It is expected that 14 billion dollars will be cut from that 27 billion dollars.
Our total debt is $83.6 billion. $3.2 billion in debt must be written off this year to bring the balance of payments into balance. For the entire four years, fourteen billion plus have to be cut. Now there has been a discussion that in order to cut that amount, the domestic debt should also be restructured. The domestic debt is 12 trillion.
Out of that three hundred million is E.P.F money. It’s money collected from the working people of this country deduct 8% of their wages monthly, and the master gives 12% of the money deducted monthly. That cut money is invested in the Employees’ Provident Fund. Only 7% of that money can be invested in the stock market. Others invest in treasury bills and treasury bonds. 300,0000 million has been loaned to the government. If foreign debt is subject to restructuring, we also face the danger of domestic debt restructuring. Whose money is that? If that loan is written off, public money will be lost to 1500000 million. Today, the commercial banking system is facing a liquidity crisis. This situation has arisen by giving loans to the government.
The Central Bank is the custodian of the Employees Provident Fund. They have brought another proposal that the Central Bank should be made independent. The bill has been submitted to the parliament. The Supreme Court has given an order that 46 of its clauses are unconstitutional. Comrade Sunil Watagala of the NPP intervened and filed a case against this bill. It needs 2/3 power of the parliament and a referendum for some clauses. The central bank is responsible for setting monetary policy. This bill proposes that the central bank should be completely independent from the government. Even the COPE Committee of the Parliament will not have the power to summon the Central Bank.
The central bank is an institution that regulates the financial market. Treasury is another financial institution. Therefore, it is said that the Secretary of the Treasury should be removed from the Central Bank’s Monetary Board. When only one person is in the financial board of a financial institution, it has an undue influence on the treasury. In order to make the central bank independent, the treasury must be removed. This is a complete liberation of the financial market of our country. By making the central bank independent, our other sectors will be greatly weakened When buying treasury bills, while lending to the government, People’s Bank, Sri Lanka Insurance Corporation buys treasury bonds and bills as a primary buyer. After this act, the central bank will not be able to buy bonds or treasury bills. When the government needs money, it cannot buy bonds from the central bank and mint money. Is the central bank buying bonds?
Whether to sell the bonds they hold depends on the stabilization of the financial market. In such a case, the Treasury and the Central Bank should come out of this disaster with a joint plan. This will create a huge crisis in our country. The most powerful anti-corruption law in Asia is going to be brought next. Ranil Wickramasinghe has brought an anti-corruption bill keeping a person who was accused as corrupt by the Supreme Court as the main organizer of the government. The problem is not in the law. Ranil said that Mahinda Rajapakse is a thief. Current Prime Minister Dinesh Gunawardena said in Parliament that Ranil is a Central Bank thief. It is ridiculous to say that those who robbed the central bank are bringing an anti-corruption bill. The existing laws are more than enough.
A major reason for the failure of this agreement is corruption that may occur during the sale. We are thinking about commercial business. Economically strategically important businesses. Telecom, port, oil corporation, electricity board, financial market, banking system, which are extremely sensitive to the economy and extremely sensitive to security, should be kept by the government. Services like education, health, transportation, these are not profitable businesses. They should be paid by the treasury and provide services to the people. Education cannot be measured in a profit and loss account. The cabinet paper has put about education to calculate the financial conditions of each university separately. Universities should not look at financial conditions but regarding professional who are created with their skill. That is where the contribution to the economy is made. Can a person’s healthy living be measured in the profit and loss account? Looking at health, transportation, profit and loss is not a right action. Those institutions should be kept by the government. Government should intervene in management.
Our plan is to encourage production. Our economy has collapsed. Therefore, we are ready to take loans to develop the necessary infrastructure for raising the production. Suriyawewa Stadium, Mattala Airport, why did they take a loan? Nimal Siripala wrote the check on January 06, 2015 when he was the Irrigation Minister for the Ging-Nil Oya project. The amount was four thousand and eleven million. The election was scheduled to be held on January 8. Not a single sod was cut. This is how the loan transactions took place. Maithripala Sirisena stated that nothing happened to the 2000 million that was initially taken to build the Lotus Tower. We don’t have the capital and technology for some projects. We take credit for that. Total investments to Sri Lanka from 2012 to 2022 are 7.7 million dollars. We need to build a country suitable for investments. Economic strategic investment is necessary. Another strategy of ours is to create a workforce with professional skills.
We Hope to expand IT technology. People should participate in the production. The village should expand. The market should be managed. We must enter into new free trade agreements. Some goods should be controlled by competition, regulation, market share acquisition, and organization. A suitable control structure will be prepared for this, which will improve production and stabilizes the market. We will create an economy that benefits the people.
We will build this broken country. We need to build a state that is connected with the modern world. Bribery, corruption and waste should be stopped. We should make Sri Lanka one of the most developed countries in the world. For that, a new transformation is needed in the economy, politics, society and public service.”