Exposing debt trap: Prof. Vitharana does laudable service
Last week many readers were drawn to a statement made by Senior Minister Tissa Vitharana in the Business Times article captioned “Sri Lankan banks moving towards severe debt trap”.
The Minister has made his comments at a media conference held by the LSSP, a constituent party of the ruling government.
Senior Minister Tissa Vitharana
Our past experience in coalition politics of the country points to many instances where constituent parties have levelled accusations and passed strictures to overcome periodic temporary set-backs in their relations with the main counterpart, merely as pressure tactics.
Presuming that the expressed concerns by the Minister are genuine, we take this opportunity to throw more light on the issues in public interest.
Viewed in the proper perspective, Prof. Vitharana’s statement is a wholesale castigation of the ruling system including the highest responsible for the Government.
Let us examine what he has pointed out in his statement.
Banking system in the country both state and private are raising international loans with the approval of the Central Bank and are getting trapped in a situation leading to a severe debt crisis.
It is laudable for a responsible Minister to cast aspersions on extremely sensitive and vital areas of the country’s economy while remaining a Minister. As members of the public we whole heartedly agree with him although what is highlighted is only a minute replica of the true picture.
For whose benefit are those foreign loans taken and where exactly do the proceeds end up is the most important issue. Has the Central Bank allowed such operations under circumstances important to the economy or to supplement the governments wanton unproductive infrastructure development activities? The Minister has clearly inferred the viscous spiral of the resulting huge debt servicing cost to be followed by more borrowings to service debts.
If we take a look at the state banks, there is a huge hidden deficit in their funds position manifestly concealed by economic window dressings. Both principal state banks have resorted to debenture funds to sustain and finance heavily loss making state institutions. Their business activities if properly assessed will clearly show auto income generations, reflected as enhanced figures, coming from lending to government and state sector, with hardly any performance oriented healthy income generating business activities, essential for commercial banking. More interesting information is certain to be disclosed exposing the imminent vulnerability of the state banks heading towards a debacle, if a survey is conducted into their current status.
Prof. Vitharana then proceeds to express his mind about the taxation system, another crucial area affecting the day to day life of the people. He has highlighted the extreme aberrations in the tax system followed by the government in imposing its rules on the people giving more tax burdens to the poor and relief to the rich.
He has pointedly referred to the massive income gap between the rich and poor in this country showing his alienation with the government tax policy of relieving the super-rich from wealth tax while failing to eliminate indirect taxes on consumable commodities of the poor sectors.
According to the Minister the fiscal deficit of the country is escalating mainly due to the inefficiency and corruption of the Tax (IRD), Customs and Excise Departments. From an independent public view these allegations are hard hitting and directly pointing at the Head of the Government under whose purview, as the Minister of Finance of the cabinet, all the institutions named here falls. In other words it is a total no-confidence on the Finance Minister, the banking system, IRD, Customs and Excise Dept. which are the key performers in the economy of this country coming under the Finance portfolio.
Whatsoever he wishes to achieve by expressing his displeasure openly against the lamentable decision making at the highest level, he has done a great service to break a long monotony.
As a mark of respect for the outspoken I wish to quote ”Leon Trotsky” from his speech “The dust bin of history” delivered at St. Petersburg on 25th October, 1917: “What has taken place is an insurrection not conspiracy. An insurrection of the popular masses needs no justification…………..
We have openly forged the will of the masses to insurrection and not conspiracy………. Our insurrection has conquered and now we are told renounce your victory make concessions, compromise. With whom? I ask with whom ought we to make a compromise.
No a compromise is no good here. Those who tell us to compromise we must say, “You are pitiful isolated individuals, you are miserable bankrupts, your role is played out. Go where you belong from now on into the dust bin of history!”……….
(The writer is a former Chairman Bank of Ceylon, former Chairman National Gem and Jewellery Authority, former President Ceylon Bank Employees Union, President of the Peoples Bank Pensioners Association and President of the Federation of State Bank Pensioners Association)