Prime Minister Ranil Wickremesinghe said the overwhelming majority of Bonds issued from 2008-2014 were direct private placements and the process seriously lacked transparency. “During the said period, Rs. 5,147 billion worth of Bonds had been issued and out of that, Rs. 4,702 billion had been direct private placements” the Premier said tabling a report, obtained from the Central Bank on Treasury Bonds issuance from 2008-2014, in Parliament.
“The direct private placements accounted for 90 percent of the total Bond issuance. The total value of Bonds issued from the public auction method stood at only Rs. 435.5 billion,” the Premier pointed out.
He said Bonds had been issued to a few selected primary dealers at arbitrarily decided interest rates without Monetary Board approval.
He also added that the Treasury Bonds issuance from 2008 to 2014 will be investigated after the on-going Presidential Commission probe into the Bonds issue is concluded.
“The direct private placement method had been heavily misused. That is why we decided to shift to public auctioning, with the aim to replace the corrupt system with a transparent and effective system. We have obtained the USA expertise to streamline the auctioning system,” he noted.
The Premier said the former Government had no Monetary Board approval to raise money through direct private placements, as it dominantly did.
“When we inquired in March 2015, it was stated that the Monetary Board decision was to raise money through captive sources to meet the short term financial requirements of the Government.
For example, the Monetary Board had recommended issuing Bonds from the ETF, EPF and National Savings Bank, etc,” the Prime Minister said.
The Prime Minister, pledging to investigate the massive scam behind the Bond issuance from 2008-2014, said it could be termed the largest pyramid scam.
The large scale scams in the stock market during the same period would also be investigated. He also directed the attention of the Public Finance Committee to probe into the loans obtained and bonds issued without the knowledge of Parliament.
He said the Government, since 2015, had only raised Rs.157.5 billion through direct private placements at four occasions.
“I obtained a report from the Central Bank on the total amount of money the Government has to pay from 2017-2045 for treasury bonds and their interests.
“As per the report, we have to pay Rs 4,154 billion for Treasury Bonds till 2045 and Rs. 3,086 billion as their interests. The government will have to raise more money through bonds in the future.
Therefore the above figures will further rise. We will carry forward the ‘Vision 2025’ plan to strengthen the economy in order be in a strong position to repay these massive debts,” he said.
The Premier, outlining the measures taken by the Government to resurrect the economy, said it targets a rapid increase in the Gross Domestic Product by 2025, thus improving the country’s ability to confront the debt burden.
The Prime Minister, while assuring his Government’s commitment to strengthen Parliament’s control over public finance said the transparent mechanisms put in place have paved the way for credible investigations.
“The President and I are committed to usher in a new political culture. It is a new experience and a complicated process. Mistakes can happen, but let us go forward rectifying them.
“Unlike the Rajapaksa regime, we are not ready to cover up wrong doing, trample the supremacy of the law and bury social justice. On January 8 we took over a country trapped in a debt crisis, where there was no law.
“Fraud and corruption were rampant and the country was engulfed in terror. Our Government,led by the President,is on track to change this plight.
That road is difficult and full of traps. I pledge to continue this mission to create a civilised Government, just society and a democratic Sri Lanka,” he said.