Rs 30 to 35 billion for new development bank in 2018 - PM

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By 2017-12-07

By Zohara Ghaffoor

A new Development Bank will be set up with an initial capital of Rs 30 to 35 billion to provide development finance to the private sector Prime Minister, Ranil Wickremesinghe said. He was speaking at the 53rd Annual Report Awards organized by CA Sri Lanka.
"We will launch a new bank to provide development finance to the private sector. The Treasury and the three State Banks will be stakeholders. Governor of the Central Bank, Indrajith Coomaraswamy and the Treasury are communicating at present with the Asian Development Bank (ADB) to also come in as a stakeholder. We request the main Commercial Banks to also come in as stakeholders, so that we don't have to run separate offices. The different stakeholder banks will then work together enabling development capital to be given to the private sector. Initially, we should have about Rs 30 to 35 billion to be given out for development activities. That is a huge amount as far as the private sector is concerned, in addition to the monies they have", Wickremesinghe said.

"I represent an organization where if financial reporting was evaluated, it will hit rock bottom because the Government is still in a difficult position trying to assess what exactly it owes and what it has to pay. I think we have completed most of the work in this regard but there is a still little bit more to finish", the Premier noted.

Wickremesinghe gave examples of these situations. He said, "The Governor of the Central Bank will tell how much was borrowed, how much was taken by Private Placements (PP) and how much of it was authorized. The PP and national debt alone was Rs 4.5 trillion with interest it will cost a mammoth Rs 7 trillion. Since we are not in a position to repay all this at the end of the period, we have to reschedule and take more loans and the final cost after about 40 years will be nearly Rs 10 to 12 trillion."

The Prime Minister noted that the previous governments unscrupulously managed financial reporting process had led to uncovered costs. "If you take the Ministry of Finance for example, it had a simple, nice way of 'cooking the books', where no financial obligation was made for many projects. As they went along, they just doled out money that was there and when we came, we found in the first month itself that the bill for road construction was a staggering Rs 100 billion more than what was forecasted."

"We are looking at SriLankan Airways, the Government has not guaranteed any loans and therefore we are not legally responsible for what happens to SriLankan Airways but about US$ 400 Million has been given by the BOC and the People's Bank and so at some stage we have to step in. This was not reflected in the Budget but unfortunately this debt burden has to be paid off", Wickremesinghe expressed.

On a positive note the Premier concluded and said the Government was keen to ensure that the State's financial reporting was in order. He said new innovations of the Government such as the Committee on Public Finance and the upcoming 2018 Budget Office Law will ensure transparency,

"We are bringing a new law titled 'Parliamentary Budget Office Law' and will be following the UK and Australia practices, where there is an independent budget office, independent of the Finance Ministry that reports direct to Parliament. This Law will evaluate the economy and the Budget. We want Parliament to have control over public finance and be independent of the Treasury, so that they could make their own evaluations", Wickremesinghe said.

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