Budget once again ties up senior citizens
View(s):Senior citizens must indeed be an unhappy bunch — when it comes to implementation of budget proposals. Sri Lankan retirees either the public and private sectors seeking to enhance their income from fixed deposits to counter mostly rising bills from inflation and cost of living, for the second year in succession have been cheated of their dues. On the back of last year’s drama where budget proposals – presented in November 2015 and January 2015 – provided a higher interest rate to senior citizens were delayed and eventually available only after March, the same chaos and confusion is prevailing this time.
This and several other budget proposals presented in January have been caught in a bureaucratic quagmire amidst many changes in the proposals, confusion over some of them and other issues delaying not only the right of senior citizens to get a higher rate of interest but also putting revenue targets completely off gear. The delay and confusion in the higher interest rate proposal as proposed and approved in the budget is just one example of the chaos that is happening over budget proposals. While on one hand, many of the proposals have been altered and await clearance for gazettes to be issued, on the other hand there is “absolute” confusion over some of the proposals.
Here are just two examples. A Business Times (BT) story this week says that the Finance Ministry has formally asked the Securities and Exchange Commission to proceed with rules and regulations to give effect to a budget proposal providing for an individual commanding a 10 per cent stake in a listed commercial bank or 15 per cent in a listed company to be given a ‘seat’ on the company directorate. Currently the composition of board directors of listed companies is not regulated. In practice board positions are based on the shareholdings of individuals or companies. While this may apply to listed commercial banks too, banks come under Central Bank regulations where non-working (board) directors must get the approval of the regulator under the ‘fit and proper’ clause.
The problem here that the proposal is not included in the English version of the budget speech. On inquiry, the newspaper was told this proposal is in the Sinhala version only of the budget, raising the question as to whether this was actually read out in Finance Minister Ravi Karunanayake’s presentation or included later. Political sources claim that this provision has been included to benefit one, particular individual who has been unable to be appointed a board director in a company dealing with financial instruments though he has a sizable stake.
The second confusion reflects a scenario where the right hand doesn’t know what the left is doing. This is about the 15 per cent special interest rate scheme for deposits of Rs.1 million and below to senior citizens from 55 years onwards.
While an impression has been created that this scheme covers all financial institutions including commercial banks and finance companies, the budget proposal refers to a scheme applicable only to licensed finance companies. Two banks told the BT this week, on inquiry, that they are yet to get a circular from the Central Bank on the implementation of a scheme that however doesn’t apply to them. Have they been told that this would also apply to them (even though the budget proposal refers to finance companies) or is it simply ignorance? Several readers also believe that the proposal applies to commercial banks and have stated so in letters to the editor, asking why there are delays in implementing the scheme.
Last year, it was the BT’s repeated stories and readers’ letters that put pressure on the Central Bank to speed up the finalisation of the 15 per cent interest rate to senior citizens, with depositors being able to access this facility in March.
Responding the Yahapalanaya way
While there is fierce criticism, from the newspaper too, on various aspects of governance, the 14-month old regime is also responding positively to issues raised in the media. A ‘news alert’ by the BT a few weeks ago about a disastrous exercise of two separate government teams attending a costly Harvard university course has ended on a happy note and reflected, to some extent, the true meaning of Yahapalanaya.The government cancelled approval of a second delegation of officials from the Finance Ministry taking part in the February 7-12 event while a team from the Prime Minister’s Office went ahead with the trip. The decision to attend a 5-day economic growth study course arose from the recently held Sri Lanka economic forum in which top Harvard University economists took part and moderated many of the sessions. A Harvard University-led team of local and foreign officials has been tasked with presenting a report on new economic strategies for Sri Lanka’s development.
While a high powered Sri Lankan team including Ministers Kabir Hashim, Chandima Weerakkody and Deputy Minister Eran Wickramaratne, was appointed by the Prime Minister’s Office to attend the Harvard meeting at no cost as Harvard University had invited a Sri Lankan delegation of officials, the Finance Ministry had finalised its own 6-member team of officials paying a course of US$7,400 each (Rs.1.06 million) course fee per participant. These details were given in a BT story on January 24. This week, the government had moved to cancel the delegation of officials from the Finance Ministry while the team assigned by the Prime Minister’s Office proceeded with the trip. As stated earlier, no doubt there are good things happening too relating to governance. At the least, the government is responding positively rather that calling up a newspaper editor or reporter and ‘blasting’ these individuals, as seen in many cases during the former regime.