Tuesday, March 1, 2016

Sri Lanka says uncovers Rs1.1 trillion hidden liabilities of Rajapaksa regime

ECONOMYNEXT – Sri Lanka’s government has uncovered liabilities worth 1.15 trillion rupees that had been hidden by the former Rajapaksa regime, making the debt burden that needs to be repaid worse than anticipated, Finance Minister Ravi Karunanayake said.

The government was now trying to find ways to repay the hitherto hidden liabilities, about 60 percent of which were foreign, by either raising taxes or reducing spending, he told a news conference.

“When we took over the economy we knew it was an absolute disaster but we never knew information would be concealed to this extent. This became known only when we took office,” he said.

“Even the International Monetary Fund did not know about these liabilities and has accepted that they were deceived by the former regime,” Karunanayake said.

“We are trying to repay this debt without imposing more burdens on the people,” he said. “We can do it by attracting more foreign direct investment, liberalising the economy and by repositioning Sri Lanka and integrating the country with the global economy.”
The IMF will send a forensic team to probe the hidden liabilities.

Most of the hidden government spending had been incurred in 2013, he said. Details would be given to the Cabinet of ministers and parliament, Karunanayake said.
It is not clear whether Karunanayake was referring to loans taken by state agencies under Treasury guarantees. At least one agency, Road Development Authority has no revenue of its own. Data already in the public domain show 564 billion rupees worth loans taken by various state agencies under Treaury guarantee from local and foreign lenders.

Karunanayake held key figures of the former regime responsible for incurring the hidden debt most of which involved deals without calling for competitive tenders or going through the normal procurement process.

They are former president Mahinda Rajapaksa as finance minister, his brother Basil who was economic development minister, defence ministry secretary Gotabaya Rajapaksa, the president’s son parliamentarian Namal Rajapaksa, Treasury Secretary P. B. Jayasundara and central bank governor Ajith Nivard Cabraal.

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