UNP Economic Spokesman Dr. Harsha De Silva MP, says the Treasury admits to a medium term balance of payments problem caused by structural weakness and that the illegal impeachment of the chief justice would impact negatively on the post war development drive of Sri Lanka.
"Respected Investors, already shying away after the expropriation carried out in 2011, again illegally, will most certainly trickle to a drip after Friday (11) when the world realizes that there is no law in this country. Lawless countries cannot attract respectable investors. Even the 2012 estimate of FDI of US$ 2 billion fell to less than US$ 1 billion.
"Even unheard of investors like Krrish, who supposedly came in on a website advertisement, are now trying to find a way to get out," Dr. De Silva alleges.
"As a matter of fact they are already in breach of the agreement; by law, the strategic investment act, stipulates certain deadlines that have to be met in order to avail themselves of the various tax holidays. These deadlines have not been met."
He told The Island Financial Review that at the impeachment debate in parliament yesterday, the government MPs had argued the findings and charges in the PSC report, whereas the opposition argued on the procedure adopted by the PSC, which the courts had deemed to be illegal.
The opposition law maker also commented on Treasury Secretary Dr. P. B. Jayasundera’s statement that the government would negotiate for US$ 1 billion from the IMF.
"Dr. Jayasundera has said the government is planning to go for a US$ 1 billion EFF (extended fund facility). The IMF clarifies what an EFF is and why an EFF is given: ‘When a country faces serious medium-term balance of payments problems because of structural weaknesses that require time to address, the IMF can assist with the adjustment process under an EFF’.
"The key words here are ‘serious medium term BOP problems’ and ‘structural weakness that need time to address’. So Dr. Jayasundera contradicts the make-believe economy Central Bank Governor Ajith Nivard Cabraal has been attempting to paint; that the economy is fundamentally strong. If the economy is structurally strong there is no need for an EFF," Dr. De Silva pointed out.
Dr. Jayasundera had said the government would negotiate for fiscal support up to US$ 1 billion, if the IMF was willing to offer it.
He said the fiscal deficit target of 6.2 of GDP for 2012 would be met. But data for the first nine months of last year shows the deficit had reached 6.44 percent. Total outstanding government debt grew by Rs. 1,128.6 billion during this period. According to the 2012 budget, the government’s borrowing limit for the full year is Rs. 1,104 billion.