Speaking at a press conference held at the head office of the JVP at Pelawatta today (8th) Comrade Tilvin Silva said, “What exists is a government that is irresponsible or doesn’t care about the people. Hence, it burdens the masses with various taxes, obtains loans from commercial banks on high interest and gamble with these funds. A group of officials that could be controlled by the government have been deployed in all important state institutions to carry out this menace. A serious economic crisis has sprung up in the country. This is due to the government abandoning all avenues that bring in income. The production economy has completely broken down. The government stated that more foreign exchange could be earned by depreciating the rupee. However, throughout the recent past the foreign exchange earnings of the country has gone down while export spending has gone up. The total export income has gone down by 5.4% during the past five months. The export income of agro-products has come down by 118%. On the other hand Central Bank statistics reveal that import expenditure rapidly goes up.
Loans are obtained from foreign organizations including the IMF to meet the losses from foreign trade. In 2009 US$2600 was obtained from IMF. The final tranche of this loan was released recently and now the government is again preparing to get another loan of US$1000 million from IMF. At the end of June the total debt of Sri Lanka was more than US$5,53,000. The government is meeting its wasteful expenditure by burdening the masses with various types of taxes and getting loans. Rs.1170 billion was approved at the last budget as the maximum level the government could get as loans for the year. During the past 5 months Rs.556 billion has been obtained as loans. By the end of the year at least Rs.1400 billion would have to be obtained. This is how fiscal limitations of the state are shattered.
Also, due to naming Sri Lanka as a ‘middle income country’ loans on concessionary rates cannot be obtained. As a result loans have to be obtained from commercial banks on high interest. In 2004 only 5% of the total loans have been obtained from commercial banks. However, by the end of 2011 loans obtained from commercial banks has increased to 43%. This paves way for a massive financial crisis. Instead of using loans obtained for a product economy, the Minister of Finance and specially the Governor of the Central Bank and its officials is maintaining an economy of gambling. This type of gambling has already devastated the economy of the country.
All the money invested in Greek Government Bonds has been lost. It is clear that billions of rupees have been lost due to this act. This type of investment would have not been carried out if these officials had an iota of knowledge regarding the financial situation of Greece. The economy of Greece crashed at the very beginning of the economic recession in 2008. Sri Lanka’s public funds were invested while Greece was having massive deficits. This government, instead of a product economy, believes in an economy of gambling. The Minister of Finance, the Governor of the Central Bank or his officials do not take the responsibility when public money is gambled and lost. It is the country that loses. Mr. Ajith Nivard Cabraal says the loss could be compensated with the investments made in other countries. However, it has not been revealed as to how much money has been invested or in what countries. This is like horse racing. Funds obtained by taxing the masses are used in gambling.
Hedging deal is another gamble. The Minister of Finance and the Governor of the Central Bank were both involved in this. Earlier, it was calculated that the loss to the country in the deal was Rs.50000 million. The situation is different now. Foreign companies have to be paid compensation as a result of ignoring a judgment given by the Supreme Court in Sri Lanka. The Supreme Court ordered to reduce the price of petrol to Rs.100 a liter. The Supreme Court had pointed out the hedging agreement could be annulled using this judgment. However, the government did not reduce the price of petrol. The Supreme Court withdrew its judgment. Hedging agreement could not be annulled. Now legal proceedings have to be carried out continuously. The cost of Arbitration proceedings with Standard Chartered Bank amounts to Rs.467 million. US$162 million plus interest has to be paid as compensation. This is how public money is wasted.
EPF funds were used to gamble in the share market. By 20th June, 2012 Rs.60 billion had been invested in 64 companies. However, the real value of these investments had come down to Rs.48 billion on the 20th June. Today the share market has dwindled further. The loss has not been calculated yet. What is happening is a very grave situation. 57.8 billion shares of Laugfs company was bought at Rs.46.36 a share. The real value of a share on 20th June was Rs.21.50. The loss was Rs. 1863 million. Rs.714 was invested in Grain Elevators company. Rs.1000 million in LOLC, Rs.900 million in Central Finance Company have been invested. EPF funds were used to show the world’s fastest developing share market was in Sri Lanka. However, today the whole thing has crumbled down. People’s money has been used on a gambling economy instead of a production economy.
A commercial court in England ordered Sri Lanka to pay a minimum of Rs.20000 million as ‘hedging’ compensation. The government says it would take legal action against this judgment. The government is wasting public funds. The government does not have any intention of using public funds for the benefit of the masses. Only Rs.9000 million is necessary to spend as ‘Samurdhi’ relief for a year. The farmers’ pension scheme requires only Rs.1200 million. This indicates that the total amount of ‘Samurdhi’ relief and farmers’ pension scheme necessary for two years is paid as compensation for foreign companies.
In such a situation masses are carrying out struggles to win their rights. President Mahinda Rajapaksa as the Minister of Finance and the Governor of the Central bank Ajith Nivard Cabraal cannot be allowed to continue to waste public money in gambling. There was a rumour that Ajith Nivard Cabraal was involved in ‘Pyramid’ racket while he was a member of the UNP. Now another type of gamble is being carried out using public funds. The irresponsible government that lacks accountability has allowed essential sectors including education and health to collapse. Even when there are many issues that should be resolved in the education sector, the government has not been able to get the Mathematics paper of the A/L examination for this year prepared without any errors. There is none to take the responsibility for all these issues. This government is not concerned about the people’s mandate. As such, it carries out an arbitrary and perverse rule. Those who called themselves ‘proud fathers’ have come down to the level of a father who breaks open the child’s till to gamble. This state of affairs should be defeated immediately. As a means of defeating this a massive mass agitation should be launched. What exists is not an issue of an individual. It is an issue regarding the function of the whole government; it is an issue regarding the nature of capitalism. A massive people’s voice should be raised against this. The JVP is prepared to give leadership to such agitations. We have already taken measures to awaken people for this task.”