year started with the government riding high on military
gains and of course the LTTE faced with a superior
conventional army thrusting forward shrunk to a limited
space taking with them a large civilian population.
army’s thrust has now reached a crucial phase having
cornered the Tigers to the no fire zone and the final
foray has to take into account the fate of the thousands
of civilians who are bound to be caught in the cross
fire. The restraint shown by the army is both due to the
certainty of civilian casualties and the mounting
pressure from the international community for a
international community for its part has been critical
of both the government and the LTTE in this regard.
President Rajapakse’s recent announcement calling on the
LTTE leader to surrender has to be taken in this
that as it may the government was on overdrive last week
to face the global recession the full impact of which is
now weighing on the country’s finances. The economic
pundits in the Finance Ministry have been burning the
midnight oil looking at additional taxes as a means of
mitigating the impending cash crunch.
Road show a flop
first road show complete with all the bells and whistles
to lure in foreign exchange through the Sri Lankan
expatriate community which to boot was marketed as a
‘patriotic fund,’ fell woefully short of the targeted
figure of US $ 600 million with only a fraction of it
trickling in. Despite the lukewarm response the pundits
in the Ministry are planning a second trip of a similar
nature and this time to countries such as Malaysia and
those in the Gulf. Desperate times it seems call for
the economy is in trouble it is the tax payer who
eventually picks up the tab. The UPFA government in this
instance too turned to taxing the public in an indirect
manner to boost rupee earnings to bridge the widening
deficits in government spending. The Nation Building Tax
is to be increased to 3% from 1%. Another bill
introduced in parliament envisages the writing off of
taxes in default of government entities.
includes corporations, GOBUs, GOBUs turned into
corporations under Sec. 2 of the Conversion of GOBUs
(Act No. 22 of 1987), ministries, government
departments, Co-op Societies and Co-op Rural Banks. This
is a scary piece of legislation. It envisages the
writing off after ‘review by the Commissioner General of
in default’ suggests that these are taxes that have been
accumulated by these government departments but not
remitted to the Inland Revenue Department. So the public
has already paid but due to various reasons, mainly
inefficiency of these entities, they are unable to pay
Erosion of trust
UNP government in 2002 introduced a tax amnesty but
President Chandrika Kumaratunga withdrew this bill and
allowed the Department of Inland Revenue to lose out on
the declared files which led to a severe erosion of
trust with regard to future government proclamations by
the tax paying public. Entities like the troubled CEB
and Mihin Air could very well seek refuge under this
umbrella and pile up further tax defaults.
week’s debate in parliament not surprisingly focused on
the state of health of the Treasury. It was left to Dr.
Sarath Amunugama to defend a weak case given his
government’s aversion to borrow from traditional low
cost sources and thereby incurring greater costs, in its
early days. So now it is back to the IMF.
Amunugama seemed to lose his cool when UNP MP Ravi
Karunanayake kept up the heat by repeatedly questioning
the balances in regard to foreign debt and the need to
burden the masses with additional taxes. His outburst
was out of character with his usually calm disposition.
MP Karunanayake wanted to know the amount of loans
taken, the due dates, the status of the now withdrawn
Gazette on public servants, whether the IMF has imposed
prior conditions and if so whether that was the
reasoning behind the Gazette.
Amunugama skirted around all these but lost it when
Karunanayake asked why the President stopped salary
increases of government servants through a Gazette
$ 200 million equivalent currency swap between Sri Lanka
and Malaysia falls due next month. Taking that into
consideration and given that it is most likely that the
IMF first tranche would be around June this year (around
US $ 400 million), the foreign reserves to serve imports
would take a further beating in the short term.
that the government is still in arbitration with Citi
Bank and Deutsche Bank over the infamous oil hedging
deal. If the ruling goes in favour of the two banks,
which seems a most likely scenario, the consequences
would be dire for the government. The country’s solvency
margings would plummet. Firefighting to get over each
financial obstacle would be at the cost of well planned,
long term gains for the nation.
buzz in political circles last week was the discussion
between Norwegian Minister Erik Solheim and K.
Pathmanathan alias ‘KP,’ the LTTE’s chief international
procurer and now head of international affairs. Eyebrows
were raised as to who arranged it, how was it done and
the political purpose of this exercise.
must be noted that there was no furor created over this
issue in the government controlled press or the
electronic media. Why? The NFF was muted if not silent.
So were the JHU and pro war lobby. Juxtapose this if it
happened when a UNP controlled government was in power?
Elementary Watson, elementary. It was some arm of the
government or someone close to the powers that be who
arranged this, though this column doubts whether the
military establishment was made aware of this manouvre.
Norwegian Ambassador Tore Hattrem, the person widely
believed to have been used to broker this, was pictured
in the government press a couple of days subsequently,
seated besides President Rajapakse in animated
conversation. No furor again.
Meanwhile the Western Provincial Council election
campaign entered its final phase. For the ruling UPFA
candidates it is a matter of ‘preferences’ with the
party confident of victory whilst the perceived front
runners are vying for pole position to push President
Rajapakse to appoint him/her as chief minister.
feeling amongst the UPFA candidates, though with some
justification, is that the war victories are sufficient
to win this council as well with ease. For the UNP it is
a case of winning
city which they have held consistently. The city’s
majority consists of the minority communities and
whether the SLMC going it alone will split the UNP vote
is yet to be seen.
UNP candidates counting several Muslims amongst them
feel otherwise. Once again an election related killing
was reported last week. A JVP cadre, Gallage was shot
dead proving that killing is now ingrained in this so
called “thrice blessed” land.
heavy weight boxing it is the title holder who picks the
challenger. Ranil Wickremesinghe on Thursday (9)
surprised title holder Mahinda Rajapakse by challenging
him to a debate. Irked by the constant barrage in the
state media and in parliament that the LTTE was made
stronger militarily during the ceasefire period,
Wickremesinghe threw the gauntlet. With the civilians
taking a beating in the final phase of the war
President Rajapakse is being pilloried by the
international community hence he will duck this issue.
Wickremesinghe has though scored some mandatory points
with this. Last week this column stated that MP Lakshman
Seneviratne pointed to Irwin Weerakkody and Bodhi
Ranasinghe as those involved in selling the UNP press.
It has now been revealed that the two mentioned above
had nothing to do with it butit was businessman Noel
Selvanayagam who handled it.
Meanwhile the lawlessness in the country continues
unabated with the likes of Labour Minister Mervyn Silva
having a field day creating one controversy after
another. Why President Rajapakse continues to protect
such politicians has baffled law abiding citizens,
leading to the rumour mill working overtime. Perhaps the
‘wild’ rumours are indeed factual in the absence of
positive action by the President.
the investigation into the killing of the Editor in
Chief of this newspaper draws towards an inevitable
blank, the international community has stood up and
recognised his contribution to the profession. Adding to
a growing list of pothumous awards UNESCO was to last
week award the World Press Freedom Prize to Lasantha
Wickrematunge. Who is Lasantha, a top government
official was to ask in an interview recently? Well the
rest of the world seems to know.