• 58% of people in Sri Lanka multidimensionally poor or vulnerable
• One set of people enjoying ill-gotten wealth, other set in poverty
• Democracy being jackbooted while IMF prog. is being carried out
• IMF review will essentially go through, but there are serious issues
• Public expenditure has been curtailed as much as possible
• Budget 2024 may probably not have too much sweetness at start

There are two nations in Sri Lanka at present, with one doing well and the other suffering like hell, charged Samagi Jana Balawegaya (SJB) MP and Committee on Public Finance (COPF) Chairman Dr. Harsha de Silva, in an interview with The Sunday Morning, citing the recently-released United Nations Development Programme (UNDP) study finding that 58% of people in this country are multidimensionally poor or vulnerable.

“There are some districts like Puttalam, where 80% of people are basically poor and 58% of people across the country are multidimensionally vulnerable – which is a more diplomatic way of saying poor – in more than one aspect. The state of the nation must be looked at in that context. Some people are enjoying ill-gotten wealth, while the other set in is poverty,” he added.

Commenting on the pending International Monetary Fund (IMF) review, Dr. de Silva said he expected it to go through, but noted that he had serious issues regarding the IMF programme, which he would take up. “For instance, they were supposed to have transparency in procurement three months ago but nothing has happened on that. Then on the governance issues, things haven’t moved at all and are actually getting worse by the day,” he noted, while also raising questions over the non-inclusion of banks in the debt restructuring process.

Dr. de Silva also spoke on the ongoing work of the COPF in his capacity as Chairman of the committee and hailed Parliament’s approval of the Parliamentary Budget Office.

Speaking on Budget 2024 expectations, he predicted that the Budget may not have too much sweetness at the start and that the Government may bring in supplementary estimates closer to elections in order to ensure popular support. 

Following are excerpts from the interview:

How do you assess the current state of the nation? Where do we stand?

There are two nations. One is doing well, spending money – go to any restaurant in Colombo and it’s full, lights are on, people are enjoying life – while the other nation is suffering like hell.

Just the other day the UNDP released a study on a massive sample of 25,000 households – which is as big as the sample of the Household Income and Expenditure Survey done once in three years – and found that 58% of people in this country are multidimensionally poor or vulnerable.

What that means is, you look beyond income – poverty is beyond income. This is the concept that we should move towards. There is a global focus on looking at poverty beyond just 2,030 kilocalories a day; it’s looking at education, health, opportunities, etc. That’s how they measure. 

There are some districts like Puttalam, where 80% of people are basically poor and 58% of people across the country are multidimensionally vulnerable – which is a more diplomatic way of saying poor – in more than one aspect. That is really the second nation and the state of the nation must be looked at in that context. 

Some people are enjoying ill-gotten wealth, including massive returns on bonds – people who bought International Sovereign Bonds (ISBs) on inside deals, officials who were paid the full amount when they bought their bonds at 35 cents to the dollar. They comprise one set, while the other set is in poverty.

With the IMF review due, what are your expectations?

I think the IMF review will essentially go through because they have met what needs to be met, but I have serious issues with it and I will take them up. For instance, they were supposed to have transparency in procurement three months ago but nothing has happened on that. Then on the governance issues, things haven’t moved at all and are actually getting worse by the day. 

They continue to say this restructure cannot be applied to the banks, that the banks will go belly up and various things, but where is the study that the experts undertook to look at the stability of the banks? Without that being put out, how can you just make up stories that the banks would have collapsed if they were burdened with some small amount of the debt restructuring?

There was a governance diagnostic study that was done, but that has not been released. In terms of governance, democracy is being jackbooted while the programme is being carried out. 

What is happening with the debt restructuring process, which has now been delayed again, and what are your expectations?

The restructure was postponed because of the legal challenge that was initiated against the increase of the tax rate on the Employees’ Provident Fund (EPF) to 30%. Yesterday and today (6 and 7 September) is the debate, so if it passes in the House today (7), the restructuring will happen next week.

In your role as a Chairman of COPF, how do you view the manner in which State finances are being managed right now? Has there been any improvement?

I must say there has been an improvement, in that expenditure has been curtailed as much as possible. A lot of unnecessary spending has been reduced or eliminated altogether. Revenue collection of course has still not come up to the expectations, because there is a hell of a lot of corruption everywhere. 

A classic case is when Patali Champika Ranawaka [Opposition MP and Committee on Ways and Means Chairman] and I visited the Excise Department and were shown those stickers that were going on arrack bottles. We realised there was a massive problem. Unfortunately I was overseas so I could not attend the meeting where the committee directed these guys to raid and they started raiding. 

They are finding hundreds of thousands of bottles on a regular basis that have been fraudulently stickered. One issue is that they are making counterfeit stickers; the other, I hear, is that this company is selling stickers to parties at 100 times the cost of the duty. This is an allegation so I am not saying it is actually happening, but this is what we learnt and we need to look into it.

We visited the Customs Department also, to see how efficient the operations are. They need to improve before catching crooks.

Is the committee receiving the necessary support from the State in carrying out its work?

COPF has a mandate. We are the most powerful committee to look at revenue, expenditure, and debt. COPF has not been properly utilised. Several times they tried to avoid me chairing this committee, but I am back here and we are getting structures put in place.

In fact, the biggest commitment came when Parliament approved the Parliamentary Budget Office. We have been having discussions with the World Bank, UNDP, USAID, and others, who are going to be supporting and helping us both financially and technically through Parliament to put the Parliamentary Budget Office in place.

If I am able to get the Parliamentary Budget Office established the way that I foresee – the proposal obviously came from the President, with whom I was working on this in 2015 – and it comes to fruition, which I hope it will soon, at least at a skeleton level, we will have the technical expertise to challenge the numbers and assumptions that are regularly brought to the committee by officials.

What are your expectations for the 2024 Budget?

It depends on when the elections are. Budget 2024 may probably not have too much sweetness at the start. They might bring in supplementary estimates later, towards the elections, to try to buy popular support. 

Will elections be held any time soon?

Yes, elections will be announced in a year’s time, because we have to have a Presidential Election by October latest next year.