Dew shoots from the hip at meeting with IMF delegation

PBJ asked senior minister to meet with the visitors

Dew Gunasekara meeting the visiting IMF delegation

By Shamindra Ferdinando-May 4, 2013, 6:01 pm 

The General Secretary of the Communist Party and Senior Minister Dew Gunasekara on Friday told a visiting IMF delegation that the country was in a dire financial crisis due to unprecedented decline in state income over the years and the failure on the part of those responsible for managing the economy to take remedial action.

CPSL is a constituent of the SLFP-led ruling coalition in power since August 1994 except for Dec. 2001-April 2004 period when a UNP-led coalition ruled the country.

Surprised delegates, including IMF’s Colombo based Representative Dr. Koshy Mathai, listened intently as senior minister explained that circumstances leading to the catastrophe situation in the power sector. The delegation included senior economist Teresa Curristine.

The veteran politician didn’t mince his words when he asserted that the Treasury no longer had the wherewithal to intervene hence the poor were further burdened. Referring to the crisis in the debt ridden Ceylon Electricity Board (CEB), the minister urged the IMF delegation not to view it in isolation but to examine the full picture. The minister stressed the primary cause for the current crisis was nothing but pitiable state income estimated at 12 percent of the Gross Domestic Product (GRP) last year. In 1978 the state income had been 24 per cent of the GDP, the minister said, while pushing for far reaching tax reforms to streamline tax collection.

In a brief interview with The Sunday Island, Gunasekera, a National List MP, said that unless tangible measures were taken promptly the economic front could further deteriorate. In fact, it could escalate to an unmanageable level, therefore it could be fatal.

When told that his opinion was drastically different from that of other ministers and officials, Minister emphasized that his only intention was to prompt those running the economy to take remedial measures without further delay. Timely action would be a necessity and strengthen the government in the long run, he said. It would be important to realize the government could no longer ignore the need to enhance its income, the minister stressed.

Gunasekera warned that the SLFP-led alliance could become a victim of its own propaganda unless tough corrective measures were taken instead of boasting of unprecedented growth in the post-war era. The country was in peril due to economic mismanagement rather than international conspiracy, he said.

He hoped the IMF would play a positive role in a process aimed at helping the country.

The current income was barely enough to pay salaries of some 1.4 mn public sector workers, pay 510,000 pensioners, pay interest on loans and provide subsidies, the minister said.

Asked whether he had sought a meeting with the IMF delegation, Minister Gunaseka said that it was Treasury Chief Dr. P. B. Jayasundera who queried whether he could meet the delegation consequent to the IMF request for a meeting with the senior minister.

"I met the delegation in my capacity as the Chairman of the watchdog Committee of Public Enterprises. I expressed my opinion on the basis of COPE investigations as well as Central Bank findings," the minister said.

The IMF recently requested Dr. Jayasundera to make arrangements for a meeting with COPE chief.

During the almost one and half hour discussion, the minister asked IMF delegates whether they could explain why the increase in the GDP as well as the per capita income didn’t reflect in state income.

The minister said that the IMF delegation agreed with his assessment and was therefore likely to closely examine the economic situation here.

When pointed out that the Opposition could capitalize on his public statements, CPSL chief alleged that some Opposition lawmakers were waiting till the economy collapsed believing it would help them. Having failed in their attempts to bring down the government, they would now hope and pray for the ruling coalition to ignore the crisis until it was too late.

The minister said that during his discussion on Friday, the IMF noted the undue delay on the part of the government in releasing the Tax Commission report.

The minister pointed out that his colleague Vasudeva Nanayakkara, too, recently called for the urgent implementation of Tax Commission recommendations. It was a crime to spend taxpayers’ money on a commission then ignore it. The draft National Audit Bill too was gathering dust for many years.

The minister also drew the attention of the IMF team to what he called a thriving black economy in which those who couldn’t explain their wealth invested here on the pretext of bringing in foreign investors. The minister said that there was another category of super rich which didn’t invest, pay taxes or save.

Gunasekera expressed the belief that those responsible for the economy would act now and his colleagues, too, take an interest in the issue without being silent onlookers. It was unfortunate the government was failing on the economic front after eradicating terrorism four years ago, though many believed the LTTE invincible.

The minister called for doubling of direct taxes from the present 20 per cent and decrease of indirect taxes from 80 per cent to 60 to bring immediate relief to those struggling on the economic front.

The minister also pointed out to the IMF delegation that the economy was in peril due to massive losses experienced by the CPC, CEB, Sri Lankan and Mihin Air. According to him almost 95 per cent of 185 billion losses suffered by state enterprises were at these four enterprises - a cause for serious concern.