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ISSN: 1391 - 0531
Sunday, December 17, 2006
Vol. 41 - No 29
Financial Times  

UNP 'gaga' over Treasury Secretary quitting reports

The United National Party (UNP) is eagerly awaiting the appointment of a new Finance Secretary by January 1, 2007 following reports that its incumbent Dr. P. B. Jayasundera wants to quit.

A senior party member said they were not concerned about the new appointee's qualifications but rather about his aptitude for 'common sense' and fiscal management.

"We are only worried about how much he can ensure proper fiscal policy and his finance management capabilities," Bandula Gunawardena, UNP parliamentarian and former deputy finance minister told The Sunday Times FT.

Gunawardene was commenting on reports that Dr Jayasundera has told President Mahinda Rajapaksa that he would like to relieved of his duties at a later date.

Putting the government's fiscal management policies under fire, Gunawardene explained that the country's fiscal policy management at present has run into deep water and that the budget has wrong objectives, because it has not been able to get the targeted revenue for the government.

He added that the UNP had helped 'pass' the budget for 2007, taking into consideration the larger picture at hand. "If the budget was not passed, the government would have to go for an election, but we did not want that to happen, because it would have put a further strain on finding solutions to burning issues at hand, such as the North-East conflict, " Gunawardena said.

He said that 2004, 2005 and 2006 has seen government finance management deteriorating rapidly and the inflation rising sharply. "During last month alone, the point to point consumer price index (CPI) has increased by nearly 20 percent. In the region, during November, such a figure has not been posted by any emerging economy.

The government blames many things on the rising oil prices, but this is worldwide problem. Yet other countries, such as India has posted a CPI of six percent", he explained, adding that the real reason for this is the expanding budget deficit and the government printing money.

He said that the government also has not been able to reduce the rapid devaluation of the rupee. "During this time, as we speak, the US dollar is depreciating in the world market and other currencies in the emerging economies are appreciating, whereas in Sri Lanka as usual it is the other way around. Continuously against the US dollar, sterling pound and the euro, the rupee is acutely depreciating," Gunawardena pointed out.

He also accused the government of artificially selling US dollars and depreciating the foreign reserves in the country. "We had only US$ 121 million foreign reserves by September 18," he said adding that this amount will last for only three more months of importing capacity for the country.

Gunawardena charged that because the government does not have reserves, they are trying to raise US$ 500 million through the Citi Bank to 'get by' the first quarter of 2007. "Government borrowing in the world market has increased the interest rates. In the local market, US$ 1.3 billion have been borrowed," he said.

He said that all countries in the region have posted single digit interest rates, whereas Sri Lanka remains as the only country which has huge interest rates as much as 16 percent to 32 percent. He added that during the past few years, no single 'big' project took place in the country because of the huge dent in the capital expenditure. “Current expenditure is being serviced by the capital expenditure.

“This is why the government has not been able to complete any project. They have just been initiating new projects, but not actually completing them,” he said, adding that the next Secretary to the Finance Ministry has to be more mindful of these issues.

Allegations against Cabraal

A Parliament select committee to investigate allegations against Central Bank Governor, Nivard Cabraal will be appointed in early February.

"We will be taking all issues and allegations regarding Mr. Cabraal," Bandula Gunawardena said. He added such an initiative is important especially when there are questions raised about Cabraal and GoldQuest. "At the recent Colombo Stock Exchange promotional tour to Singapore, some fund managers had questioned about whether there is a money laundering threat in the country. Therefore it is absolutely important that all allegations against Mr. Cabraal are cleared," he added.

 

 
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Copyright 2006 Wijeya Newspapers Ltd.Colombo. Sri Lanka.