The Sunday TimesFront Page

7th July 1996




Report proposes tough economic reforms

By M. Ismeth

Elimination of commodity, wheat and fertilizer subsidies and stopping of massive recruitment of untrained graduate teachers have been recommended to the government by a team of economic experts.

The Sri Lanka side was coordinated by Dr. Lal Jayewardena (Economic Advisor to the President), Dr. Chandi Chanmugam, Dr. L. Gunaratne, (Director of Research, Central Bank), Dr. R. M. K. Ratnayake, Dr. P. Ramanujam, T. Maxwell, N. Tiruchelvam. Dr. A. S. Jayawardena, Governor Central Bank, initially led the Sri Lankan team and guided the study throughout. On the World Bank side the team included P. Alba, S. Lateef, M. Prywes, C. Hartler, R. Nangia, A. G. Karunasena, V. Iyer and C. Kanda.

The team including World Bank experts and local policy analysts has also recommended increased commitment to BOO and BOT projects in public utilities and line agencies, and more privatisation programmes, including AirLanka.

In short-term measures it suggests a debt fund to supplement private debt and equity capital, expansion of public expenditure in high return and labour intensive activities such as rehabilitation of roads etc.

Other recommendations:

* Consolidate interest payments of Janasaviya into a new better targetted programme (Samurdhi).

* Eliminate wheat and fertilizer subsidies.

* Adopt more stable protection level and system in agriculture.

* Eliminate quantitative restrictions.

* Begin to privatise Bank of Ceylon and then the People's Bank.

* Review restrictions on investments by the EPF and Employees Trust Fund.

* Allow primary dealers to hold treasury securities on their own account.

* Strictly limit hiring into public sector.

* Eliminate commodity subsidies.

* Use privatisation proceeds for retirement of debt.

* Increase expenditures for operation and maintenance in key sectors.

* Increase cost-recovery in rail, electricity and petroleum products.

* Eliminate tax exemptions and concessions.

* Maintain a stable and competitive exchange rate.

In the Public Administration area the team recommends:

* Limit new hiring and cancel unfilled positions.

* Establish overseeing mechanisms for implementing civil service reform.

* Institutionalize prompt and complete financial reporting and auditing.

* Revitalize the role of the Parliamentary Public Accounts Committee.

* Adopt transparent and streamlined procurement procedures based on competitive bidding and standardized documents.

PM urges people to back the package

Prime Minister Sirimavo Bandaranaike yesterday made a strong Eto support the government's devolution package stressing the government would never allow any division of the country.

In a special statement, the Prime Minister said the military gains made over the past few months would be effective only if they were backed up by a political solution.

She said:

"The war has claimed 50,000 lives during 13 ardous years and has blighted the life of every Sri Lankan whatever his or her race, religion or social status. It has effected adversely every aspect of our national life. The economy, interracial amity, relations with foreign countries, the very psyche of the nation have been warped, disfigured and damaged due to the ongoing conflict. The physical damage, when quantified is of astounding proportions but it pales into insignificance when compared to the anguish caused by the loss of life and limb particularly among the flower of Sri Lanka's youth who have been cut down in their prime by this accursed war. These losses can never be fully compensated.

"Our Government offered the Sri Lankan people an opportunity to end the war. We promised to usher an era of peace reconciliation and healing. The Sri Lankan people placed their faith in us and, at three successive elections, gave us an unequivocal mandate to end the war and to secure a victory for peace. We endeavoured to fulfil this promise by peaceful overtures and displays of our good faith in numerous ways. All our efforts were brought to naught by the intransigence of the LTTE.

"Our armed forces have since fought the enemies of peace and have gained victory after victory. Our brethren in the North have been liberated and our Government is doing its utmost to ensure the resumption of civil administration which will enable them to live their lives in peace. Our efforts towards rehabilitation and reconstruction in the war-torn areas will be redoubled and normalcy will be restored once again.

"While we salute the heroism and valour of the armed forces, while we praise them for their successes, we should also consider how this peace, won at such great cost, could be made lasting and durable. How are we to ensure that the forces of war are not unleashed once more on the long suffering Sri Lankan masses? If we are to bestow the long delayed fruits of economic development on our people, we must ensure that armed conflict is no more than an unhappy memory.

"The Government is fighting this war not to subjugate or dominate any section of the Sri Lankan populace. The lessons of history teach us that military victory over insurgency, terrorism, militancy of rebellion will never be a final solution. Armed insurrection against a legitimate, democratically elected Government must be defeated. However, militancy is only one manifestation of a deep rooted problem. While we strive to defeat those who have taken up arms with all the means and determination at our command the underlying social issues must be redressed if we are to be sure that the tragedy of conflict is never again to be inflicted on our people.

"Our Government has proposed its own solution to what it perceives as a social problem which transcends ethnicity and other societal divides. What we aim to do is to empower all our people, be they Sinhala, Tamil or Muslim, to be able to play a meaningful role in the determination of their destiny. The people in the South, just like their fellow Sri Lankans in the North, have a right to decide on their collective future. What our Government intends to do is to provide means whereby they are allowed to exercise this right to the full

." Issues relating to development need not be referred to Colombo or Sri Jayawardenapura for decision. The people directly affected by development initiatives in a particular locality should have the right to make decisions in that regard. The means to achieve this is the large- scale sharing of power among all Sri Lankans in every part of the island. This is the basis for our Government's proposals for the devolution of power.

"The right I speak of is not an absolute right. It has certain limitations. Power will be devolved only in so far as it is necessary to facilitate speedier development . The only aim of the devolution proposals is to make administration more efficient, making people's lives easier. Matters of national significance will continue to be decided upon by the centre. This Government will never stand for the division of our country. We will never let the unity, territorial integrity or sovereignty of our country or its people be compromised. The proposals for the devolution of power contain many safeguards to ensure this.

"We never sought to foist our proposals on the Sir Lankan people. We were completely open and honest as to our intentions. At present these proposals are being debated on by your representatives in the Parliamentary Select Committee on the Constitution. The people's views have been sought and considered. We will continue to pay heed to our people who have entrusted us with the governance of our nation. We will never betray your trust. We will do nothing that is at variance with the aspirations of the people. We commend these proposals to you as the one means by which a lasting peace may be achieved. We, in turn, place our trust in you that you will use your own good judgement to support our effort to usher in a better, more prosperous future.

"Our Government has set Sri Lanka on a path that leads to peace and a brighter tomorrow for all. Do not let those who seek to lead the nation astray by stirring up emotions deter you. Hatred, anger, vengefulness, suspicion and rancour have no place in this new Sri Lanka we are building. Let us unite and bequeath to our children and grandchildren a country that will be the pride of all Sri Lankans and the envy of the world.

Lankan captain dies on ship: foul play, says family

By Shelani de Silva

Mystery surrounds the death of Captain of a Sri Lankan ship while it was sailing off Madras and the Foreign Ministry has called for a report from the High Commission in Madras after a family member alleged foul play.

Captain C.D. Peries has died last Tuesday when the vessel was leaving the port. It is claimed that tow ropes had suddenly snapped, hitting him on the neck and chest.

However Captain Peries's family have raised doubts about the claim. Teddy Peries, the Captain's brother said he had reason to believe it was murder. Mr. Peries residing in Dubai on hearing the news, had immediately contacted the local shipping agent requesting them to probe the death.

"After I received the fax it was evident to me that my brother was murdered. They sent me a letter stating that my brother was on the deck and also that he was intoxicated. But I say that if he was the Captain he should have been on the bridge and not the deck. Also any person knows that a Captain is prohibited from taking liquour before leaving. Further more I got to know that the shipping agency had been in debt to my brother, and that my brother was to leave the agency the following day, on his return to Sri Lanka," Mr. Peries said.

He alleged that the agency without the consent of the family had tried to bring the body home. "When I felt suspicious, I contacted the Foreign Ministry and I was told they were not aware of the incident. The same answer was given by the Madras High Commission. Once I informed them they agreed to look into the matter," Mr. Peries said.

Captain Peries's family is determined to have a full investigation. "When I made the complaint to the CID, I was told that such cases were handled by Interpol. I sent a letter through the Foreign Ministry. Though problems have arisen I insisted that we were going ahead with the investigation. At first I wanted the body brought to Sri Lanka without it being embalmed for a post mortem, but the agency, without informing the family had embalmed saying that since arrangements were made to bring the body to Colombo they went ahead with it," Mr. Peries said.

Meanwhile an official at the local shipping agency has strongly denied allegations of foul play. George Chandra of Magnum Maritime (Pvt) Ltd., told 'The Sunday Times' that they were bringing the body to Colombo with the family's consent. "The allegation directed at the company is baseless. Accidents do occur on board. We have decided to pay the family compensation. The talk that he was not paid is incorrect we will have our own investigation," he said.

Mr. Chandra said he could not comment on whether Captain Peries' contract was over as the Marketing Director of the company was out of the island.

It is learnt that the Consular Division at the Foreign Ministry had not been informed of the incident by the shipping agents. According to Mr. A. Ariyarathne at the Division they were awaiting a reply from the Deputy High Commission. "We have sent all the details to the relevant officials but there is no response. The High Commissioner has been kept in the dark. But after the family intervened he is doing his best," Mr. Ariyarathne said.

Bribery Commission questions Health Sec.

By Arshad M. Hadjirin

The Bribery Commission has questioned Health Secretary, Dr. Dudley Dissanayake over the controversial IV fluid deal which led to a strike by doctors.

Dr. Dissanayake has been questioned about certain contradictory statements on the issue and about a visit to India to a pharmaceutical company.

'The Sunday Times' learns that the Bribery Commission has sought an appointment with Health Minister A.H.M. Fowzie on Tuesday to further discuss the issue.

Mihaly hauls govt. over the coals

With the power cut still in force, the tug of war over the Trincomalee coal fired project has now taken a new dimension. Mihaly International have threatened to sue the Government of Sri Lanka to the tune of US dollars 150 million for terminating the letter of intent issued by the previous government on the US dollars 600 million project.

Though the previous regime gave the letter of intent to Mihaly International the PA government terminated it in October 1995.

Reports say that at a meeting on February 2 this year at a meeting presided over by the President it was decided to revoke the earlier Cabinet decisions of August 94, calling for fresh offers and begin talks with Barclay Mowlem of Australia.

It is now reported that the legal firm of Easkem Martineau in Canada has written to the Attorney General of Sri Lanka of their intention to sue the Government of Sri Lanka on 'binding arbitration proceedings' under one or more of the investment protection treaties, for settlement of the investment dispute.

The letter signed by Queens Counsel J. Michael Robinson to the AG states that Mihaly International will claim for recovery of all their costs and expenses in connection with the coal fired project. In addition the company will also claim compensation for its bargain profit which would have been earned during the 20 year BOT period of the project.

The law firm has given the government 10 days to negotiate a settlement on terms set out by Mihaly or face legal action in international courts.

MP escapes attempt on life

A civilian was killed and three others, including a police officer, were injured when suspected Tamil rebels, opened fire at the residence of a Tamil MP in the Batticaloa District, military sources said yesterday.

TULF MP P. Selvarasa who was at his home in Kallar at the time of the attack escaped unhurt.

The gunman who had come in a threewheeler around 9.30 a.m. opened fire and the civilian killed had been there to meet the MP.

The gunman had fled the area and the vehicle was found abandoned in a nearby area.

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