The Daily Mirror in its Editorial last Monday focused on the grave economic crisis the Rajapaksa regime is facing despite denials or boastful claims by Government leaders and top officials. We revealed that according to Finance Ministry figures, Sri Lanka’s export earnings had declined drastically and the revenue had come down by three per cent to Rs. 509.4 billion, while expenditure had increased by 3.3 per cent to Rs. 861.6 billion during the first half of this year compared to statistics last year.
Yesterday our sister-paper, the Sunday Times highlighted a shocking repercussion of this economic crisis. The front page lead story said semi-privatisation and a share issue either through the public or private entities to divest nearly half the bank’s capital were likely for the debt-ridden People’s Bank which was set up in 1961 mainly to help the common people.
A recent report by the parliamentary Committee on Public Enterprises (COPE) has revealed that Rs. 31.38 billion had been taken as loans from the People’s Bank by 52 businessmen but had not been paid back so far. The COPE report also revealed that 29 persons who had received overdrafts to the value of Rs. 1.18 billion had not settled their debts, 109 more customers who had obtained a total of Rs. 5.9 billion too had not settled their debts.
A senior People Bank official as usual has denied there are any moves to partly privastise the People’s Bank but a top Government official said the Government was considering retaining 51 percent of share capital and divesting 49 percent either through a private placement or an Initial Public Offer (IPO) share issue with the state possibly retaining management control, the newspaper reported.
In a tough statement against any such move, the Sri Lanka Bank Employees’ Union said the Government would have to face serious repercussions if it went ahead with the plan to sell shares in the bank to the private sector or to individuals under the cover of restructuring.
Earlier the independent media had quoted COPE chairman D.E.W. Goonasekara as saying that not only the People’s Bank but also the Bank of Ceylon and the National Savings Bank were facing serious financial crises mainly because they were virtually forced to give massive loans to top businessmen who had patronage from political VIPs and to loss-making state institutions such as Mihin Air, SriLankan Airlines, the Ceylon Petroleum Corporation and the Ceylon Electricity Board. Apparently under some pressure the COPE chairman later denied the report accusing the media of creating panic among those who had invested in the state commercial banks. But now the truth about the People’s Bank is being revealed as is the truth about the overall state of the economy.
A top Treasury official warned last week that severe austerity measures would have to be imposed and these would come mainly in the form of higher taxes on consumer goods and services along with the reduction or withdrawal of subsidies given to farmers, fisherfolk and those who are living on or below the poverty line. As we stressed in our Editorial last Monday, we reiterate today that if austerity is the answer to Sri Lanka’s grave economic crisis, then it must begin with Government leaders and top officials. They must give up most of their excessive luxuries and their extravagant lifestyles instead of penalising millions of innocent people for the Rajapaksa regime’s mismanagement of the economy and rampant corruption that is not being curbed but is getting worse with the latest horror being the smuggling of some 250 kg of heroin worth more than Rs. 2.5 billion. This is believed to be one of the biggest heroin hauls in Asia and it seems that we have become the heroin hub instead of the Miracle of Asia.