Sri Lanka’s national government divides over parliament vote

Apr 08, 2015 (LBO) – Sri Lanka’s national government has divided over a parliament motion moved at increasing the maximum amount to borrowings through short term treasury bills.

The motion which intended to increase the threshold from 850 billion rupees to 1,250 billion rupees was defeated in parliament with 31 votes in favor and 52 against.

“Now we have to pay 670 billion rupees just because of Rajapaksa’s undue projects.” presenting the motion finance minister Ravi Karunanayake said.

The resolution eventually allows the finance minister to a borrow additional 400 billion rupees by issuing short term treasury bills.

Since the parliament has the ultimate authority over the country’s finance, it is obligatory to have prior permission from the house to raise the maximum limits.

“This is a strategy to manage our debt properly. If you see the yield curve, we have to pay a lower interest for short term treasury bills. So we need to have a mix.” Harsha de Silva told parliament.

Rejecting opposition claims minister Karunanayake said the funds were to be utilized for Samurdi allowances and paddy purchasing process and not for the public sector pay hike.

Since the motion moved to parliament on Tuesday is not a finance bill, the defeat would not trigger a dissolution of parliament, the finance minister was quoted as saying in media reports.

The motion came under the local treasury bills ordinance, which is originally a colonial law.

However the defeat pushes the finance ministry to borrow through longer term debt instruments paying a higher interest rate.