Treasury had revenue excess in Feb.’15 – Dy. Sec.

Published : 8:39 am  July 19, 2017 | No comments so far |  | 


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CB bond sales 

Heated argument between ASG and Mahendran’s lawyer 

By Shehan Chamika Silva   
Treasury Deputy Secretary Sajith Attygalle yesterday told the Presidential Commission of Inquiry (PCoI) that there was an un-estimated excess in Treasury revenue in February 2015 and there were no shortfalls.   

He said the Treasury was in good order in respect of the difference between the actual debt requirement and the total borrowings by the government in January and February 2015.

Mr. Attygalle who had been handling the Treasury management, fiscal policy and Treasury Operation Department since 2012, explained Treasury Management to the PCoI, during the cross examination by Counsel Chanaka de Silva.

According to the witness, the Treasury usually communicated the government’s fund requirements to the Central Bank’s Public Debt Department on the least cost, using the Treasury’s cash flow statements.

He explained that the Government revenue would be largely allocated to the entire expenditure of the Government, while the debt service repayment would be settled using CBSL borrowings.

The witness said the Treasury generally required more borrowings from the CBSL in expectation of using them for expenditure as well.   
Repayment of the debt services amounted to Rs.33.64 billion for February 2015.  The Treasury asked for Rs.46 billion from the CBSL for February. However, the CBSL had managed to raise only Rs.40.5 billion.  The witness said it was not unusual by the CBSL and in case of a deficit, it could be raised by other means.

He also said that there was an excess in estimated revenue amounting to Rs. 10.5 billion by the middle of February, thereby there were no short falls in Treasury accounts.

“If the CBSL failed to supply the required amount indicated in the cash flow, then the Treasury would go for alternatives like postponing some expenditure of the Government or obtaining overdrafts from BoC and People’s Bank,” he said.

He said that at the end of February, 2015 the Treasury was quite fine. Thereby, the new fund requirements for March 2015 were indicated to the CBSL, which was entirely different, because the February requirement is no longer relevant.

However, it was revealed earlier that there was a request from the Finance Ministry to the Central Bank of Sri Lanka in the middle of February, 2015 regarding the urgency of raising additional funds amounting to Rs. 75 billion.

Earlier the witness had said that he was not informed by any government entity, prior to the controversial Bond auction that took place on February 27, 2015.

Counsel Chanaka de Silva questioned the witness about several meetings that took place in the Finance Ministry, the Cabinet, and the CBSL regarding the urgent requirement of funds for the Road Development Authority projects during the months of February and March.   
The witness said that he was not part of those meetings, and thereby unaware about what was discussed.

In the meantime, during the Cross-examination, a heated argument took place between Additional Solicitor General Dappula de Livera and Counsel Chanaka de Silva who was appearing on behalf of the former Governor.

The argument began when Mr. de Silva commented to the objection raised by the ASG regarding a question put forward to the witness during the cross examination.

“You cannot dictate to me,” said Mr. Livera. The Counsel said that the ASG cannot dictate his line of questioning. Replying to that Mr. Livera repeatedly said that he could and would dictate.  Interfering into the intense argument, SC Justice Prasanna Jayawardena advised both the senior counsel to discontinue the argument, as it seemed to be unsuitable behaviour.