Bonds; Now It’s All Greek To Me
By Mahesh Senanayake –July 5, 2016
Mahesh Senanayake
“It’s all Greek to me” is a famous English idiom which means “difficult or beyond understanding” and it has a greater degree of relevance in the current context of the national debate on the issuance of Treasury Bonds by the Central Bank of Sri Lanka of which one of the responsibilities is to, in simple language, find “money” for the government which in most cases in the form of “debts “. Treasury bond is one such tool used by the central bank for borrowing purposes which is now known to the most of the average Sri Lankan due to the topic being discussed at national level politics. However, the said topic failed to grab the public attention during the past decade except on one occasion where the story was all water under the bridge by the time the Sri Lankan citizen had had the privilege to know what had happened to the public funds as the rulers of at the time was smart enough to conceal the story and hoodwink the public who immersed in patriotism. Thus, we did not know what the bond was meant for and how the personal “bonds” of the people who ran the show marred the original script of “running the country” presented in elections manifestos which ranged from liberating the country from the clutches of terrorism and from the economic downfall and went on to promise unplugging the economy from the debt trap. Here begins the story of “It’s all Greek to me…”
The latest story related to the bonds occurred in March 2015 with the advent of the yahapalana government with an accusation hurled by the members of the joint opposition towards the government that they had used the issuance of bonds to raise funds required to pay the bills for the cost incurred at the presidential elections and to get ready for the forthcoming general elections. The critics were smart enough to write a script that could unfold a severe blow to the newly appointed rulers, so that they could discredit the new rulers without accurate facts in hand. The concocted story presented a bleak picture of how the “precious” government security known as Treasury bonds were issued giving undue advantage to a primary dealer who was connected to the government and the governor of the central bank. They started calling it a “bond scam” and gave birth to the first part of “it’s all Greek to me”
Hither, the new Governor of the Central Bank appointed by the yahapalanaya government took immediate steps to strictly follow a transparent method in issuance of bonds through a public auction system. In contrast, his predecessor adopted a system which is called private /direct placement where the transaction took place between two parties which occurred quite unnoticed with no due scrutiny. The preference for private placement by the previous rulers is evident in the number of occasions wherein the bonds were issued through private placements and auctions which stands 80 % in favor of the former mode. The auction system is believed and accepted as the most transparent mode in contrast to the private placements. Yet, some critics who were silent contributors to the corrupt Central Bank practices, attempt to create public opinion that private placement is the best practice or else not a bad practice and, go on saying that corruption is prevalent in the auction system.
