Country's economy is beyond restitution- Ravi Karunanayake
20 November 2013 08:22 pm
The United National Party (UNP) parliamentarian Ravi Karunananayake, speaks to Daily Mirror expressing his views on the upcoming budget discussions in the aftermath of the Commonwealth Heads of Government Meeting (CHOGM) and the current political and economical situation of the country. Mr. Karunanayake who has been a member of Parliament for 19 years was also the former Cabinet Minister of Commerce and Consumer Affairs.
" Health is another area. Health requires a lot of input from ways of medicine. An innocent man falls ill, goes to the hospital and ends up dead because government hospitals don't carry the medicines, he has to go to a private institution and by the time they see the cost of the medicine, they are already dead "
Q: The budget discussions for 2014 are starting today. Where do you think the country is headed for with the 2014 budget?
A: I think this country's economy is beyond restitution. It has been assisted by government decision-makers who have pawned tomorrow for day after and are live on borrowed times. They are trying to show to the world a glossy picture of the President. Economic hit-men have very successfully passed that test. But the poor people of this country have got to suffer the debt crisis, the over taxation crisis, the excessive capital expenditures crisis and the corruption which all put together have put Sri Lanka in a very bleak financial position. This budget will obviously not make any more of a difference but only adorn to the burdens of the people.
Q: Could you elaborate on the implications of the debt crisis Sri Lanka is currently experiencing and how this would impact the budget?
A: The debt crisis in this country has become intolerable. From 1948 to 2005 the total debt of the country has been 1784 billion rupees. 2005 to the present time, the debt is 6800 billion rupees. This three-fold increase in the last eight years has surpassed the total debt accumulated in 57 years. Now is there a material benefit that we have achieved? We have moved our debt from half a percent interest factor from collateral lending agencies such as IMF, ADB, the World Bank and countries that have been friendly to us to Chinese commercial vultures who lend at 7.5 and eight percent interest without any conditions or to the international community which has come in and bought treasury bonds at 9.5 percent. So you have internationalized our public debt and have made it, instead of a long-term payment, a short-term pay-back approach.
So we are heading towards a crisis that has been experienced in Philippines and Nepal - economies which have suffered immense problems, never to regain their lost glory. And we are no different when we have Central Bank governors who live on statistics and not the real world situations and fool the people all the time.
Our general earnings to the 2013 budget have been 1200 billion rupees. Meanwhile, our payments for capital amortization an interest have been 1300 billion rupees. So how do you sustain a country where you spend more than you earn? You must be able to pay back for what you have spent.
Q: The civil war which has been plaguing the country for nearly three decades ended in 2009. It has been more than four years and the military budget since then is expected to be transferred for development purposes. Do you see that happening?
A: The menace of terrorism ended four and a half years ago and where are the peace dividends? This is the question that people have been asking. This is where we say this government, which is ruling the country in a very dictatorial manner at the expense of the people, coupled with corruption is not providing the benefit to the people. During the war they asked the people to tighten their belts and put them on a war-mode. But then to today, the people have not been switched back onto the peace-mode. The peace dividends are yet to come. It is going to a handful of people, mostly political cronies.
The balance sheet of the country has not reflected the real payments that have been made. For example, in 2009, the military budget expenditure was 159 billion rupees. But today, after the war, the armed forces, the police, in this 2014 budget is getting 311 billion rupees, almost twice more than it was during the war. It is due to mismanagement, robbing to glory and because there is no financial discipline.
That is what the people are experiencing today, where their lives are still very difficult, the cost of living is very high and one salary is not enough for one week. So it is incumbent on the government to stop their tamashas and bring the country to genuine growth.
" The terrorism menace ended four and a half years ago and where are the peace dividends? This is the question that people have been asking. This is where
we say this government, which is ruling the country in a very dictatorial manner at the expense of the people "
Q: How would the UNP government handle the debt crisis?
A: The way that the country is heading, I don't think this can last another year. We have proven that the development takes place at an accelerated pace when the UNP is in power. And all pockets of the general public have been filled. How we will attack the debt crisis is that firstly, we will eradicate the corruption which exists in layers and have become a way of life. Next one, the high capital amortization and interest cost, that is taking on 1.2 billion rupees will be harped and the 600 billion rupees will be put into capital infrastructure, without borrowing unnecessarily and recycle that to generate funds. We would achieve this by bringing down the i7-8 percent interest rate back to half percent. Salaries will be increased with a minimum of 10,000 rupees. And we will also ensure public-private partnerships will be encouraged and instead of government stooges getting government institutions, it would be a done in a corporate style.
We will correct some of the flaws that we had previously and go into robust economic development with international trading partners where labour GSPs and free trade agreements will become cost-free benefits to good governance, as we demonstrated in the past. This will reduce the cost of living of the people, increase the earning capacity of the family unit and bring the savings that have eroded or which had been robbed off into the mismanagement of the current regime.
One classic example is the labour GSP that the UNP government got in the early 2000's and was lost out by this government in the late 2000's. The impact of this is roughly 200 billion rupees per year. It was not aid but was facilitation for trade given for good governance. So this is the professionalism the UNP has to get back, without burdening the people.
Q: So are you saying that there was and will be no corruption in a UNP regime?
A: I would be lying if I said that there were absolutely no misdoings when UNP was in power. Human frailties do exist. Certainly, the UNP will ensure that we have the capacity to go well beyond and have a corrupt-free regime. We will ensure that media freedom is given, right of information is given, and access to international institutions will be given so that no comfort zone for rogues will exist. The Bribery and Corruption Commission would be made independent to ensure we give no room for anybody to engage in such nefarious activities.
Q: In your opinion, what areas need the most attention in the current budget discussions?
A: Well the most attention is required in education, in health, in restructuring capital and interest repayments and mostly in ensuring transfer of funds take place to the needy and not to the wealthy which is what is going on at the moment.
Today the education budget allocated by the central government is 44 billion rupees, including higher education. To this there is a provincial element. However, this is not even 1.3 percent of the GDP. You have experts saying there should be at least a 6 percent allocation. I believe that a 4 percent allocation would be a very substantial step in the right direction. Instead, they reduce the budget allocation for education and increase the funds to be spent on carnivals and fun-fare activities of the government.
Health is another area. Health requires a lot of input from ways of medicine. An innocent man falls ill, goes to the hospital and ends up dead because government hospitals don't carry the medicines, he has to go to a private institution and by the time they see the cost of the medicine, they are already dead.
Another area is the cost of living which is unbearable. They tax people beyond practical reasoning. For every 100 rupees you spend, directly or indirectly you are taxed almost 45 percent. This is the kind of over-taxation that people are going through today.
Q: Do you believe that casinos can benefit Sri Lanka's economy?
A: Owing to the economic crisis, there are no investments coming into the country. Even in the commonwealth business forum you could see that the only star attraction was the casinos of James Packer. So as result no other attractions can they get.
Well this is the government that said no to liquor and cigarettes. However now they have encouraged all those vices. Most of their revenue comes from cigarettes and hard liquor. They have all the vices in town from prostitution to drug-trafficking. So the only thing missing is casinos. The government says that no licences will be given for casinos. Then what was Packer doing here?
As a policy the UNP wholesale refuses it and believes that it is unwarranted. No licences for casinos have been given during the UNP times. Not just the UNP but all the political parties on both the opposition and in the government are opposed to casinos. It is only the SLFP that is in favour of casinos.
And another question I have is, why are they not auctioning? In Singapore, the country gained almost $200 billion by auctioning the casinos. Here, they are trying to give it without any licences. Don't blame the operators of casinos, blame the government for allowing them to go on.
They have no other options so they are taking this short-cut. However, the vices that will flow with them will be far more detrimental to the economy.
(Await part 11 of this interview - What UNP says about CHOGM)