‘Public sector has wasted money’- Amunugama
While expressing that President Mahinda Rajapaksa will win future presidential election hands down, Cabinet Minister of Public Administration and Home Affairs and Deputy Minister of Finance and Planning, Dr. Sarath Amunugama said that the public sector has failed to make money for the country and only wasted money
Following are the excerpt of an interview

By Gagani Weerakoon
Q: The government initially decided to bring down interest rates on loans of public servants, now the government has decided to bring down all interest rates below 10%. There are thousands of people who depend on deposit interests. Do you think it was a wise move by the government to bring down interest rates especially given that the country is now put on an election footing?
There are two sides to the question of interest rates. When the interest rates are very high it is a disincentive for business enterprises. People cannot borrow or invest money in businesses as they have to pay huge amounts back to the banks as interests. As a result a large number of small and medium scale industries collapsed and entrepreneurs had to go into debt because the interest rates were exorbitantly high. That is one side of the problem.

On the other side we have lots of local savers. Saving habit is very strong in Sri Lanka. All pensioners, government servants and various other people put money in banks and depend on interests monthly or annually. So the government must balance these two aspects. On one hand the government must let the economy grow by allowing people to borrow money if they have good ideas. They borrow money and invest and make more money and then the economy grows. So we have to stimulate that. On the other hand we must preserve the habit of saving.

So what we have done is to reach a balance between these two necessities. What we are proposing is something under 10 percent is not too difficult for the investors. Of course they would like for us to bring down the rates even more. On the other hand we have to think about the man who is saving and look after him.

A very important thing about interest rates is that it is related to the inflation. If the inflation is very high and if someone is saving money, in reality he is losing because the value of the money they are saving will come down pretty fast. Faster or higher than the interest they are receiving. Sri Lanka can now manure because our inflation rate has come down to one percent. So even if a person is getting 8-9 percent interest is a substantial amount as it is way above the inflation rates. That is why we took that decision.

Q: The government says it will increase the salaries of the public sector. Does the government have enough funds to do so?
Yes the government has enough funds but the question is how to allocate that money. When the salaries and the pensions increase, the money available for other investments of the government reduce.

On the other hand the government must ensure that there is peace in the country. If there are constant strikes and breakdowns then there will not be a good environment for economic growth. So we have to satisfy that appetite as well and keep the work force happy. However, we cannot generate enough money to provide jobs for all. Many communist countries like the Soviet Union had this policy of jobs for all but for a very low salary. It is a total failure as bright people with good initiative will not want to work for a low salary. There are two options. One is to provide jobs for all for very low salaries and the other is to provide jobs for a selected few for very high salaries. Anyone with proper sense will not go for a full employment for low salaries.

So we have to have a situation where the government’s commitment will be contained within a certain amount of money and in the future people will have to go to the private sector for employments.

Q: You were for the privatisation or reforming public institutions when you were in the UNP government earlier. Are you in other words saying that the government should go ahead with reforming certain public institutions?
I am not for privatisation. I am for public and private sector partnership. In the modern world it is not a matter whether a firm is owned by the government or the private sector. What is important is the management and who manages it properly. Even in big companies in the USA there are hundreds of shareholders and it really does not matter who the owner is. They should deliver the goods and make a better return for the country and the consumer. That is why Chinese leader Deng Xiaoping once said ‘I don’t care if it’s a white cat or a black cat. It’s a good cat so long as it catches mice’. He was not bothered whether they are socialist or communist or private sector. That is not our job. They have to do the job and create wealth in the country. The public sector has failed to create wealth and they are only wasting money. We have to look at better management.

Q: It is said that the government is Rs 115 billions below the targeted revenue for the year. What do you have to say about this backdrop?
When there is a downturn in the global economy, demand for our manufactured goods also come down. Equally the tourism comes down. Also people do not bring down vehicles or machinery so that the government revenue on those things also will come down. As a result when there is economic slow down as a result of western market slow down then your economic targets get reduced.

Q: Are you saying that even other countries have such a noticeable percentage like 15% of backdrops?
Yes. Lots of countries have that problem even India is facing loads of financial problems as a result.

Q: In Parliament you said that the Opposition MPs should not be allowed to visit IDP camps in the North. On what basis did you make such a statement?
What I said was it is not a case of Opposition forever being kept out to see the IDPs or even the media. When the right time arrives they will be allowed to visit them right now we are trying to manage a difficult situation. The Opposition is always trying to capitalise these and trying to score points. So if they allowed there they will only create further bad feelings among the IDPs. So what we feel is till the matter is under control- now that more than 100,000 were sent back homes and the remaining too will be sent back to their villages- till all these matters were settled – we don’t think the opposition need to come and create problems. For example, when the human rights matter was being discussed in Geneva, there were several Opposition MPS who used their mobile phones to give impression to Geneva that there are lots of problems in Parliament and MPs being attacked. All those were done just to influence the vote in Geneva. So until these matters were solved we don’t want mischief makers be they of the Opposition or of the media to mess up the situation.

Q: Don’t you think that these elements could use this situation against the government on the lack of transparency?
How can there be any problem about transparency. Now the most vocal critics were in Chennai. A representative group of Chennai politicians came here and observed the situation. They said that the situation is not at all as bad as what they were made to believe. Then we have UN officials who go there and NGOs are working on de-mining. So why should we try to follow the agenda of other interested parties be it the media or political parties. We can work to our own agenda.

Q. Now the country is put on an election footing and there are speculations that the former Army Commander too will enter politics. What do you think about the upcoming elections?
It is no matter which election comes first. Whatever the election is it is a one horse game and the president will win hands down. In Sri Lanka, being a democratic country any one can come into politics. But, in present case President Rajapaksa is so popular and done so much I think it is very foolish of Gen. Fonseka’s part to enter the fray. There will be no contest.