Treasury acting like the Kremlin

Amidst the goings-on in Geneva and the hullabaloo over a proposed anti-Sri Lanka resolution at the ongoing UN Human Rights Council (UNHRC) sessions, a news item buried in the local newspapers last week was about the removal of the acting chairman of the Ceylon Petroleum Corporation (CPC), a senior official of the Ministry of Finance, also known as the Treasury.

The removal, by all accounts, was summary. The public servant was given little or no notice. The crime he had ostensibly committed was that he had written to several debtors of the CPC, including SriLankan Airlines and Mihin Lanka, asking them to pay their bills.

One would imagine that the acting chairman was carrying out his legitimate duties. The CPC is not only facing massive losses because these Government-owned institutions are not paying their fuel bills and taking for granted continuous uninterrupted deliveries, but is riddled with mismanagement, over-staffing and corruption at every level, which saw the previous chairman sacked from his job overnight.

So then, why was this public servant jettisoned from his seat? The CPC has functioned this entire week without a replacement. Was it because he had the temerity to venture into territories closely guarded by the powers-that-be?
The official reason is not known. The people of this country will never know. This is a democracy only at election time, and not in the intervening years when it is run by a coterie of politicians and officials. The Treasury which takes these decisions makes even the Kremlin in Moscow appear to be a shining example of transparency in government.

Government ministers - the Cabinet as a whole, are equally in the dark when decisions that impact on the daily lives of the people are taken. They only pretend they know and sulk in silence. When the recent fuel price hike was announced it was done behind the backs of the line ministers who could only mumble things when asked by the media to explain matters to the public. Not that these puppet ministers can do anything about it either, but the entire concept of collective responsibility and Cabinet government is thrown out of the window.

It is almost as if the Treasury is answerable to no one, least of all Parliament that is the representative body of the sovereign people. One might ask if public servants are expected to be doormats with their initiative killed. SriLankan Airlines has long been considered a 'sacred cow' by successive governments. There is some magnetic attraction it has. Unfortunately, it comes with a heavy price that the ordinary people have to pay for through the public purse which is in the hands of the Treasury.

It is ironic that just the other day, the Chairman of SriLankan explaining away the mounting losses of the airline told this newspaper that 60 per cent of the airline's operating cost was its fuel bill. Now we are told that the airline owes the CPC several billions in unpaid fuel bills. If that is the case what is the total loss of the national carrier? Is it the Chairman of CPC who must be kicked out of his job?

It is now an open secret that there is no love lost between the Treasury and the Central Bank and internecine fighting has reached the very top. When the Treasury stealthily got the rupee devalued last November, it was kept a secret from the Central Bank. The country had an early glimpse of the manner in which the country's financial wizards were at work. Then came the fuel price hike following an IMF visit to the country.

Clearly, these were measures that needed to be taken some time back as the country's Balance of Payments, i.e. the difference between the expenditure and the earnings in foreign currency deteriorated. Thanks to some economic gymnastics the Central Bank kept the rupee artificially propped up. But in the last three months the rupee has now been devalued by as much as 8 per cent, and is expected to tumble further.

Recent reports in this newspaper on the possibilities of fuel rationing and the foreign borrowings from 'Peter to pay Paul' in a debt trap, have neither been denied nor confirmed. The Treasury just keeps silent. There is an onus on the part of the Ministry of Finance to keep the public informed because it is the public which has to face the ultimate brunt of these fiscal measures by the decision-makers with price hikes.

Sri Lanka's sovereign repayment schedule for 2012 is worrying. Its Balance of Payments deficit is more than worrying. Simply put, we pay far more for our imports than we get from our exports and other earnings from abroad. According to available data, Sri Lanka must pay US Dollars 762 million (Rs. 92 billion) in 2012 as repayments of loans taken in previous years.

With the rupee falling, there is the fear of imported inflation or Sri Lankans paying for inflation in other countries where the goods come from. The US embargo on Iran is going to have a crippling impact on Sri Lanka's oil imports.

The general scenario is quite bleak, at least in the coming months. As much as tough new economic belt-tightening measures have been put in place, dealing a severe blow to the lower income groups, it is imperative for the Treasury to come clean with what's happening.

The international rating agencies that report on Sri Lanka's economy to the outside world express mixed views ranging from caution to cautious optimism with dwindling external liquidity. They certainly don't subscribe to the make-believe world the government propagandists try to portray. There will also be a limit to whipping the patriotism card when the bellies are empty.

In all this, the signal from the Treasury is a dismal one. No doubt it has ridden many storms before, but to sideline an official and send him to the pool of public servants, commonly known as 'Siberia' in the public service, is as if he has done something that deserves punishment.

The deafening silence on its part on the state of the economy, until a thunderbolt strikes the public as it did with the steep fuel hike last month cannot be the norm for a democratic nation. And on this score at least, the government cannot surely blame another international conspiracy to be behind destabilising Sri Lanka.

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Editorial Archive 2012 
01st January 2012 - The hopes and fears of 2012
08th January 2012 - Education fails
15th January 2012 - Ties with India vital but not at any price
22nd January 2012 - Handling India the President's way
29th January 2012 - Political stability - not autocracy
05th February 2012 - Freedom struggle continues overseas
12th February 2012 - Lesson from the Maldives: Listen to the people
19th February 2012 - Belt-tightening must start at the top
26th February 2012 - Good governance the answer
04th March 2012 - Treasury acting like the Kremlin
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