Govt. has failed in good fiscal management: SJB

• Harsha says stock market and securities outflow sign of lack of investor confidence 
• Warns economic impact of COVID-19 will be harder to bear with weaker fundamentals 
• Calls on Govt. to make use of low global interest rates and raise funds for debt repayment 

The Samagi Jana Balawegaya (SJB) yesterday charged that the Government’s failure to practice good fiscal discipline had eroded investor confidence, posed significant challenges in debt repayment and caused social injustice. 

Dr. Harsha de Silva

Former parliamentarian Dr. Harsha de Silva made the allegation at a press conference held at the SJB party office last morning. 

“We saw major losses in the stock market yesterday, foreigners selling off Government Bonds and the rupee taking a hit, we can see investor confidence dropping,” de Silva charged, pointing out that the Government was fully aware of the large debt repayments due this year but implemented a range of tax concessions aimed at gaining political benefits at the upcoming General Elections. 

He charged that the Government’s range of tax concessions introduced after the Presidential Elections broke earlier established fiscal discipline which was implemented by the previous Government aimed at ensuring economic stability while managing debt repayment. 

Addressing concerns about the economic impact of the COVID-19 virus, de Silva pointed out that countries which had maintained good fiscal discipline were less effected by international crises. He cited the 2008 global economic crisis as an example. 

“The Government does not want to pass on the savings from the drop in international fuel prices as they do not want to lose a source of revenue for the Treasury,” he opined, pointing out that the Government will likely make a minor reduction in the price of fuel but will not pass on significant benefits to the public. He accused the Government of not delivering social justice by not passing on fuel price benefits to the public. 

“The Government cannot reassure investors and has failed to restore their confidence, nor can they force businesses to pass on the benefits of the tax concessions to the general public,” he said. 

De Silva pointed out that due to the laws enacted by the UNP-led Government of 2015 for debt management, the present Government has the capability to use the Active Liability Management Act (ALMA) to borrow more as much as $ 2 billion from international financial markets when interest rates are low. 

“The Government is in a position to use the ALMA to borrow the monies needed to repay debt not only for this year but the next as the international interest rates have dropped to a record low,” he explained.   

However, the Government needs to have a clear and well thought out national policy on fiscal control and debt management to get the best out of the ALMA, he warned.