State Minister of Finance Eran Wickramaratne, said fiscal consolidation, empowerment of people, reducing the Budget deficit, curbing inflation and channeling more funds into nation building projects such as Health and Education improvements, ( with a special emphasis on strengthening the entrepreneurial base), will be the key features of the Budget 2019. In an interview with the Sunday Observer State Minister Wickramaratne said the 52 day political coup was an instance of Sri Lanka’s strength where Parliament and the Judiciary stood up to the Executive. However, the financial cost of the coup has been computed to be around Rs.21 billion!
Q: Amidst poor economic forecasts and indebtedness, what can the people expect from the Budget?
A: The 2019 Budget will be a balance between building on the fiscal consolidation foundation of the past two years and also empowering the people, basically on the macroeconomic side by reducing the budget deficit and bringing inflation down. The other important aspect is spending more on health, education and up grading the skill levels of the Workforce. We have to ensure the people’s buying power increases, particularly for women, and we want to strengthen the entrepreneurial base in the country.
These will be some of the empowering aspects of the Budget. The entrepreneurship is to strengthen Small and Medium (SME) industries and also to encourage new entrepreneurs to commence. The people need financial strength to take their creative ideas to the market.
The other is educational skills. We propose to widen in particular, school education and post secondary education, so that skill levels go up. In addition, the ‘Enterprise Sri Lanka’ project will be expanded in a big way providing the people much needed financing to propel their industries with incentives to do so. Investment relief is also being given so that the people who invest will not have to pay taxes until they have recovered their investments. In conflict affected areas, incentives are even bigger.
Q: A Budget needs adequate time to have its productive policies implemented. Are you optimistic that the Government can ‘deliver the goods’ before the expiry of its tenure?
A: Yes. If you look at the things that we are doing some of these will have an immediate effect. Fiscal consolidation has an immediate effect. If you take up-skilling and education, the opportunities and demand are there but the people don’t have resources to access them. If you take Enterprise Sri Lanka, its results may take longer to appear. In ‘Gamperaliya’ the results are almost immediate because it is investing in the local economy. In fact, the proposals are already out there. In its first phase, (around May , June) , tanks, some water ways and rural roads are being rehabilitated and school infrastructure is being built. After the Budget we will have new money in the Rural Economy.
Q: A big slice of the Budget is allocated to debt servicing. Are the remaining resources sufficient for development and other services?
A: Debt Servicing is very high and in the medium term we plan to bring the debt servicing component down. That is a problem we have inherited from the past and we have to deal with it. We have to bring down the Debt Servicing component from the high that it is now over a period of time, maybe from 70 % of GDP to 60% of the GDP. We are on a ten-year program and we will systematically bring it down.
Q: How much did the 52-day political coup cost the Government economically, financially and politically?
A: Politically I would say, it shows Sri Lanka’s strength though it was a political coup- an attempt to grab power without having a parliamentary majority and that was defeated in Parliament. It shows the strength of Sri Lanka’s Parliament and the judiciary which stood up to the Executive. On the financial cost, we have computed it roughly at about Rs.21 billion. When the (international debt) Ratings of the country went down, the cost of debt went up particularly foreign borrowings, and therefore local borrowings also went up. But the economic cost is much higher and no computation can be done because there is a loss of confidence in terms of new investors coming in, and also existing investors reinvesting.
Q: Don’t you think it morally offensive to allege that some Ministers and MPs take cocaine without mentioning their names. What will be the final proof of this allegation? Has the Committee report recommended any action?
A: I think it is not proper to make allegations that people take cocaine or even that people are corrupt. It is not only about cocaine and the same thing about corruption. Sometimes, we talk very loosely and often say ‘so and so is corrupt’. I think if we are making an allegation on corruption or cocaine, we should have the evidence to make it. Also, we must report to the relevant authority which actually investigates the allegation. I would say that is the base principal to be fair by State Minister Ranjan Ramanayake, he has reported his information to the CID. So now it is up to the CID to investigate. The Committee that was appointed had two aspects. One is that they don’t have the skills for the investigation and also it is a very preliminary hearing. We will call for a report from the CID to find out whether there was any substance to the allegations.
Q: The Opposition attacks the Government, saying that it has inherited a legacy of debt while negotiating billions of rupees in loans to run the country. Would you explain this?
A: It is the present Opposition which has been in power in this country since 1994 and in this period of 25 years, the borrowings has grown up tremendously. Just from year 2000 up to now, our concessionary foreign borrowings have gone down to 45% from 98.7 %, so it is really they who are responsible for the debt that they have taken at high cost and with poor conditions attached. It makes it even worse when they have applied some of the debt into nonviable projects which bring in no Returns.
The Port, Airport, Cricket stadium and the Conference facility in Hambantota and the Highways that were built are just some of them. Most of the loans that we have taken are to repay debt and to meet the obligations. In all, debt has gone up by 35% and 25 % of it has gone to take care of the past. In the four years it is roughly about 10 plus percent which is an increment of only 2.5% per annum. This is a very small increase of debt within the period that we have been in Office.
Q: The Opposition has outright condemned the Constitutional Council (CC) as politicised while the Government maintains the CC should continue by rectifying shortcomings if any. Your comments?
A: The CC was created with the 19 th Amendment. When the 19 th Amendment was brought up in Parliament, two thirds of the majority was with former President Mahinda Rajapaksa’s party and 223 MPs voted for it including those who are criticising it now. The thrust of the 19 th Amendment was to re-balance the power between the Executive Presidency, Parliament and Judiciary. The 19th Amendment has succeeded through the creation of Independent commissions.
The allegation is that after the nominations are sent some of the nominees have been rejected. That is obvious. Because if you send three nominations for one position, only one is picked, naturally. I won’t call it a rejection but instead say that the other two were not selected. That is the first thing we need to understand. Otherwise, it creates a false impression.
The second thing is the argument that sometimes senior people have not been appointed to the positions. If this decision is going to be made purely on seniority you don’t need a Constitutional Council or a Commission. That is a mathematical calculation. But as we all know for appointments you need some discretion to be used after analysing the credentials of the candidates.
All nominations for those important positions are referred to by the President but the CC has to approve it. Eventually the appointment has also to be made by the President. So every single person appointed has been nominated and appointed by the President. Obviously all his nominees have not been approved by the CC. I think that we need to clearly understand this.
The next thing is whether or not seniority should be the only criterion. Various factors - such as a person’s seniority, past record of efficiency, contribution made and reputation he or she has in that particular field, also have to be looked into. For example, in the case of an appointment to the Judiciary, the candidate’s contribution to Jurisprudence has to be considered.
A decision has to be made as to who fits best. I think it is an excellent system being currently used, as the discretion is now in the hands of many. These are appointments, not promotions. So when the President nominates he is nominating for an appointment and he makes appointment but it goes through a very rigorous process.
This independent process should be used elsewhere too for all Government appointments. In the case of the appointment of a President’s Counsel, we should have a good process which doesn’t depend only on an individual. Then the faith and confidence citizens have in the system, will grow.
Q: Is the Government ready to abolish the Executive Presidency as it was reported that the President, Prime Minister and Opposition Leader are willing to do so. If so what will be the position of the 13 th Amendment?
A: I think we need to separate the two. The 13th Amendment is on devolution of power. We have a Central Government, Provincial Councils and Local Government Bodies. When we talk about devolution, sometimes there is an idea that only the people in the North are asking for it. That is not true. It is actually the people in the South who were asking for it. If we look at the recently held Chief Ministers conferences, all the findings and reports of such conferences ask for more devolution of power. This is an issue that is being talked of around the country and those Councils have been asking for more and more powers. There is also a subsidiarity principal that decisions are best taken closest to the people rather than very far from them. So that is also fulfilled here. That principal of devolution will continue even in a new Parliament.
The question is whether it is going to remain with the directly- elected President? Or is it going to be shared with indirectly elected President in Parliament and basically, the Government and the Cabinet of the day?. So it is not that you abolish executive power but it is how executive power is going to be weilded.
There is a debate about that. Most Presidential Candidates over the last 20 or 30 years have come forward saying the Presidential system is not suitable and should be abolished. After they come to power, they have not fulfilled that idea. Maithripala Sirisena is the only President who has give up some of his powers to Parliament under the 19 th Amendment. Still he hasn’t fulfilled what he promised the electorate. If we are going for the abolition of the Executive Presidency or major amendments, after we have decided in Parliament, the Judiciary may direct that the decision be referred to a Referendum.
Q: What is the present position on drafting a new Constitution? Will it ever see the light of day due to political tug-of-war among the stakeholders?
A: Possibly, it can, because we have had many Constitutions. For about 40 years we were using the second Republican Constitution of 1978. We already have 19 amendments to it. We should bring in a new Constitution which reflects the people’s aspirations. The present constitutional process is the first where every political party in Parliament has been involved. In the two earlier processes, political parties representing Tamil speaking people had not been involved.
This time they have been fully involved. So having different views and ideas, what you called a tug -of- war, is a part of democracy. That is nothing to be feared. Actually these things are best openly discussed, debated and talked about.
This is what is happening and this is the most inclusive process ever in our history of Constitution making. We have had a Steering Committee and another six Sub Committees, and all reports were given including the Steering Committee report, for Parliamentary debate. Now we are in the drafting stage of a Constitution. Thereafter it has to go through a full debate in Parliament and receive overwhelming support in Parliament. Then it will have to go to a Referendum. We hope that this process might be completed in Parliament, early. If we don’t complete it in this Parliament, I am sure it will become a central theme, even in the next.