April 02, 2018 (LBO) – In a recent speech in Parliament, JO MP Tharaka Balasuriya highlighted some problematic technicalities in the Active Liability Management Bill.
The bill has encountered some controversy, with the Supreme Court finally having to weigh in through a verdict confirming that the bill is in fact constitutional.
Balasuriya highlighted that this is indeed a very powerful bill. The bill allows the Minister in charge to raise up to 10 percent of country’s total outstanding debt through Parliament. These funds can only be used for refinancing and pre-financing of existing loans. He states that as the total debt outstanding is Rs10 trillion, the mechanism can be used to raise up to Rs1 trillion.
The JO MP does think that an active liability management bill is a necessity, due to the debt related problems about to emerge in Sri Lanka.
He goes on to state: “The objective of this Act as stated is to manage public debt to ensure the financing needs and payment obligations of the government are met at the lowest possible cost. This bill also provides tremendous power to an individual, in this case the Minister in charge of the Central Bank who is empowered to decide on the quantum of the loan and the mode of raising such a loan. Section 4 of this bill somewhat checks this power, stating that the minister can obtain loans only with the approval of the cabinet of ministers…..”
Balasuriya complains that as the quantum of the loans can be massive, a direct reference should be made in the act itself to the Monetary Board, and that these matters are best handled through the Public Debt Department.
The JO MP then went on to complain about the Prime Minister having too much power in this liability management process as the Central Bank is under this ministry. Shortly after this speech the President took action to gazette the Central Bank back under the Finance Ministry.
Balasuriya states: “I have no problem with the Prime Minister, except for his track record. Now this house wants to give this man the power to raise 10 percent of our national debt or roughly Rs one trillion, in any manner he sees best. In any event Mr. Speaker, even if it was not the Prime Minister at the helm of the Central Bank, I am sure we can all agree that more safeguards need to be brought in.”
“If the government is not willing to make the necessary amendments, then we must remind Maithripala Sirisena that he is indeed the President, and in matters such as this it is better to be proactive and prevent large scale malpractices from taking place, rather than reading about them in newspapers…”
Balasuriya is a signatory to the no-confidence motion against the Prime Minister to be taken up on April 4th.