Trust deficit results in public confusion regarding economic issues

Most economists and others who are familiar with the reasons for the current economic crisis attribute it to the gross mismanagement of the past two and a half years. It is also true that corruption has played a significant role in making a bad situation worse.

Past sins of economic mismanagement too have added to the woes of a struggling economy and widespread allegations of corruption have left the public perplexed and caused confusion in the public mind as to the nature of the challenges faced by the Government. A few examples may make things clearer.

Agriculture Minister Mahinda Amaraweera has publicly been lamenting for the past few weeks that although the Cabinet approved two billion rupees for the purchase of paddy from farmers, the two State banks were not making the funds available for the Paddy Marketing Board to make the purchases from farmers.

Why the State Banks were not providing the funds despite the Cabinet decision was never made clear.

The farmers on the other hand were complaining that private mill owners were buying paddy from them at prices below the Government stipulated prices.

There were insinuations from some quarters that the funds to the Paddy Marketing Board were being withheld to facilitate the private mill owners to buy all the paddy.

It was only last week that facts relating to the reluctance of the State banks to provide the funds to the Paddy Marketing Board came to light.

State Finance Minister Ranjith Siyambalapitiya told a television channel that the State banks were not in a position to release funds to the Paddy Marketing Board as the latter owed them a total sum of more than 20 billion rupees. Of this sum, the Paddy Marketing Board owed the Bank of Ceylon and People’s Bank Rs. 1,600 million and Rs. 690 million, respectively.

Mr. Siyambalapitiya explained that the Paddy Marketing Board had run up this huge debt as successive governments had directed it to purchase paddy at a higher price and then ordered it to sell at a much lower price thereby causing staggering losses.

In the meantime the issue of the non-purchase of paddy from private farmers by the Government remains unresolved with the farmers and the people unable to figure out whether it was due to corruption, years of mismanagement or due to the current economic crisis.

Meantime the purchase of oil too is mired in controversy. National Freedom Front (NFF) Leader Wimal Weerawansa has for some time been advocating the purchase of oil from Russia, whom he claims can supply the country with oil at more favourable terms than what is being purchased at present.

The Government seems to have explored this option but have in the process run into controversy. Samagi Jana Balawegaya (SJB) Parliamentarian Kabir Hashim has alleged that a sum of US$ 90 to 95 is being paid for a barrel of oil purchased from Russia though it is possible to purchase a barrel at US$ 68.

Equally disconcerting is the allegation by Public Utilities Commission of Sri Lanka (PUCSL) Chief Janaka Ratnayake that the Ceylon Petroleum Corporation (CPC) had imported the wrong crude oil with the wrong composition.

Ratnayake claimed the unsuitability of the naphtha refined from this consignment with its high sulphur content was the reason for a recent extension in Sri Lanka’s scheduled daily power cuts from one hour and 20 minutes to two hours and 20 minutes.

Power and Energy Minister Kanchana Wijesekara has denied the allegation and has threatened legal action against the PUCSL Chief. The PUCSL Chief welcomed the opportunity to prove his allegations in court.

The energy sector has also been affected by the controversy over coal imports. The company that was awarded the tender to supply coal withdrew from the process after complaints about irregularities in the process of awarding the tender.

The successful company apparently withdrew from the process as it did not want to be tied up in legal proceedings which were threatened by one of the unsuccessful parties. The Government has been compelled to take alternative measures to obtain the necessary coal shipments before the end of this month.

If the October deadline is not met, there is a real possibility of increased power cuts, which of course will hit the people as well as production in vital sectors of the economy.

The trust deficit in the Government machinery results in the people being inclined to believe the allegations of corruption and mismanagement even if all such allegations are not true.

The lesson in all these incidents is that the process must be kept squeaky clean and transparent so there is minimal chance of challenge which can result in delays in the supply of essentials. The ultimate victims of weak procurement processes are the people who are always at the receiving end of such lapses.